Hypothetically speaking if you buy a share and you keep accumulating and end up you are let say 10% owner of the entire share of the company or may be 20% you know what I mean you become major owner.
What will happen to you ? you will run the company ??? I mean what is the option that happen to the person?
There are differences between directors and shareholders
As a director or CEO, you will run the day-to-day operations of the company.
As a shareholder, you are the owner/part owner. And are basically the “supervisor” who would mostly focus on appointing the directors who can best run the day-to-day operations and approve/reject major decisions/proposals directors propose.
Note: There exists different share classes with different voting rights though.
Of course, if you are major shareholder, you can appoint whoever including yourself to be the director if that is what you want since no one can outvote you.
If we are becoming majority of shareholder and if we appointing ourself become the director, technically we can earn the director fee
Director fees come from the income of the company which belongs to the shareholder either way
This is interesting. But care to elaborate what it means?
Based on my understanding, director fees are considered expenses to a company. So, if you pay director fees, it would reduce the distributable profit to the shareholders.
Although they could be some tax benefits in doing one (pay oneself via director fees) or the other (declare dividends) depending on the tax bracket of the director income tax and company income tax.
Another variable is that if you are simply 51% majority shareholder and not 100% then, I guess it might be good to pay yourself via director fees but that might piss other 49% shareholder(s).
Thanks for the explanation!