ABSTRACT
This chapter provides the legal nature of a share and the rights and liabilities of a shareholder. The initial share capital of a company is determined by the shares taken by those who sign the memorandum of association. All shareholders are members of a company, but not all members are shareholders. Creditors of the company cannot sue the shareholders to obtain payment, as the creditors legal rights of action are against the company. A new class of shares is created by a company issuing shares with rights or liabilities that differ in some respect from all existing shares in the company. The names given to certain types of shares with certain key characteristics are not always legally significant. The capital maintenance principle is not intended to prevent the distribution to shareholders of that part of the wealth of the company that has been achieved by the company generating profits.
