I am a shareholder in a limited liability company; What can I do?

A limited liability company can be incorporated provided that one or more persons have signed the memorandum and the articles of this company and have agreed that they will hold shares in this company.

The shareholders of a company are not authorized to represent the company and act on the company’s behalf since this is an option available to the company’s directors. The shareholders, however, can have specific authorities provided by the law which allow the shareholders to exercise control over the directors and ensure that the corporate transactions are taking place for the benefit of the company.

According to the Companies’ Act Cap. 113, shareholders have the power to influence a company’s financial and business activities. For example:

The general meeting of the shareholders is competent to decide on the following issues:

• The amendment of the company’s memorandum and articles;
• The change of the company’s name;
• Any changes regarding the capital of the company;
• To terminate the appointment of a director;
• To examine the accounts, the balance sheets and the reports of the company’s advisers and auditors;
• To proceed with the election of the directors replacing any directors who have been removed by the board or have resigned;
• To appoint the company’s auditors and determine their renumeration;
• To proceed with the declaration of dividend disposal.

In addition, the articles of a company can provide the shareholders with further authorizations of control over the company’s directors and transactions.

According to Companies Act Cap. 113, the shareholders should attend an annual general meeting. The first general meeting should take place within 18 months from the date of the incorporation and be held each year. Any other meeting of the shareholders is considered as an “extraordinary general meeting”, and can take place at any time the shareholders wish, provided that a notice is given to all the shareholders. Notice periods are specified by the law, and should be taken into consideration in order for the company and the shareholders to ensure that such a general meeting was properly declared. The decisions of a general meeting should be recorded in writing and be kept in the company’s books and records.

In conclusion, the directors of a company are subject to the general meeting’s control and the shareholders are entitled to make sure that the directors do not act without having the company’s best interests in consideration.

The content of this article is valid as at the date of its first publication. It is intended to provide a general guide to the subject matter and does not constitute legal advice. We recommend that you seek professional advice on your specific matter before acting on any information provided. For further information or advice, please contact Chrystalla Philippou, Associate at our Athens Office, Greece, Tel +302 103387060 or email chrystalla.philippou@kyprianou.com