A corporate shareholder is a business entity that owns shares in another limited company. The term ‘corporate shareholder’ may refer to another limited company, a limited liability partnership or a non-profit organisation or charity. The rights of a corporate shareholder are exactly the same as the rights of an individual shareholder. They are defined in the prescribed particulars attached to their shares. Like all shareholders, corporate shareholders enjoy limited liability for the company’s debts. They have to pay for the value of their shares when the company asks them to do so. That is the extent of their financial responsibility towards the company.
Having a corporate shareholder that is also an external investor can be advantageous particularly for new companies. The stability and expertise of an established business can help to create brand value. Being backed by a corporate shareholder may also make it easier to access favourable rates and payment terms from suppliers and manufacturers.
