Shareholders are the owners of the corporation. They have ownership rights in the shares of corporate stock. The role of the shareholder in the corporation is limited, however, as they have neither the right nor the obligation to manage the day-to-day business of the enterprise.
The shareholders are the owners of the company and provide financial backing in return for potential dividends over the lifetime of the company. … By investing in return for new shares in the company. By obtaining shares from an existing shareholder by purchase, by gift or by will.
A shareholder owns and controls a limited company through the purchase of one or more shares. A director is appointed to manage a company on behalf of its shareholders.
Common shareholders are granted six rights: voting power, ownership, the right to transfer ownership, dividends, the right to inspect corporate documents, and the right to sue for wrongful acts.
Types of Shareholders:
- Equity Shareholder:
- Preference Shareholder:
- Debenture holders:
A chief executive may be the majority shareholder in the company, but in a public corporation of any size, normally is not. Large companies have market capitalizations (total share value) in the hundreds of billions.
Stockholders can have considerable influence in a business because they own it. A shareholder who owns a majority stake clearly controls the company, but even small shareholders can wield influence, individually or collectively, through their shareholder rights.
Section 168(1) of the Act states that the shareholders can remove a director by passing an ordinary resolution at a meeting of the company. … This must be given to the company at least 28 clear days before the meeting at which the resolution will be moved.
One of the main powers that the shareholders have is to remove a director or directors. … Whilst the most significant powers the shareholders have over directors must be exercised by at least 50% of shareholder votes, minority shareholders do some, although more limited, powers.
Conclusively, the shareholders are owners of stock in the corporation. They are not the owners of a corporation’s assets.
Generally it is the shareholders that hold the power in the company with the directors being responsible for its day to day running. In most successful companies the directors and shareholders work closely together and are open and transparent about the actions and direction the company will take.
As an ordinary shareholder you are entitled to:
- Participate in annual general meetings (including the election of directors and director remuneration)
- Access reports and other relevant company information.
- Dividends (should the company choose to pay a dividend)
- Dividend reinvestment plans (if offered by the company)
Profits made by limited by shares companies are often distributed to their members (shareholders) in the form of cash dividend payments. Dividends are issued to all members whose shares provide dividend rights, which most do.
Shareholders are otherwise known as the members of a company. Under the Companies Act, 2013, any person can become a shareholder and a person could mean an individual, body corporate, an association or a company irrespective of its incorporation.