DIRECTOR AND SHAREHOLDER, WHAT’S THE DIFFERENCE?

Every company registered in Nigeria, has a director and shareholder, and both roles are different. And because of their roles, a director may not necessarily be a shareholder of a company. A shareholder need not be a director of a company either. However, a director may at the same time, be a shareholder of a company.

WHO IS A DIRECTOR?

A director holds an ’employee’ status as far as a company is concerned. Because a director is simply responsible for the daily administration of the company, he/she is described as the directing mind and will of the company. No doubt, in practice, he might have subordinates who respond to him, however he/she is responsible for steering the overall direction of the company. When you think of a director, think of a “glorified servant”. The ‘perks’ that comes with such position is given by the company to encourage dedication to the work, such director has been appointed for on behalf of the company.

WHO IS A SHAREHOLDER?

A shareholder on the other hand, is a part owner of a company by virtue of his/her paid capital (financial/sweat) contribution to the company made in exchange for shares. The shares in question yields dividends which are expected to be paid over a period of time. Such shares acquires rights such as; voting rights, dividends etc. In summary, when you think of directors think WORK, and when you think of shareholders, think CAPITAL/FINANCIAL INVESTMENT.

I hope this is understood?

Cynthia Tishion
Cynthia is a lawyer and currently serves as Head of Corporate / Commercial Services at LEX – PRAXIS. With her passion for business and entrepreneurship, she is actively engaged in creating awareness on the legal aspect of businesses through various platforms such as writing, public speaking engagements.

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