What rights do shareholders have?
- 1 To attend general meetings and vote. …
- 2 To receive a share of the company’s profits. …
- 3 To receive certain documents from the company. …
- 4 To inspect statutory books and constitutional documents. …
- 5 To any final distribution on the winding up of the company.
The shareholders make decisions as owners, and the directors make decisions as the managers of the company. When setting up a company, it is often the case that the initial members (shareholders) and directors are friendly and anticipate no issues with making decisions within their company.
What decisions can the shareholders make?
- amending the companies articles by special resolution;
- changing the name of the company by ordinary resolution;
- approving a substantial property transaction by ordinary resolution;
Officers and Directors have a fiduciary duty to the company and its Shareholders, the highest duty of loyalty known to law. … Since Shareholders elect the Directors and Directors elect the officers, it is apparent that Shareholders hold the ultimate position of authority in a company.
When a company wants to remove a minority shareholder, they have the option of buying back the shares. However, the shareholder can refuse to do this. So the next option is rather drastic and time-consuming. The company can be wound up (voluntarily).
Companies are required to send a copy of its annual accounts and reports for each financial year to every shareholder of the company. … Shareholders are not however entitled to receive or inspect copies of general a company’s financial records.
Companies are owned by their shareholders but are run by their directors. … However, shareholders do have some power over the directors although, to exercise this power, shareholders with more that 50% of the voting powers must vote in favour of taking such action at a general meeting.
Shareholder(s) with at least 5% of the voting capital can require the directors to call a general meeting of the shareholders to consider a resolution overruling the decision. … Shareholders can take legal action if they feel the directors are acting improperly.
If the majority shareholder holds voting shares, they may dictate the direction of the company through their voting power because voting shares give a shareholder permission to vote on different corporate decisions, such as who should be on the company’s board of directors.
Shareholders and directors have two completely different roles in a company. The shareholders (also called members) own the company by owning its shares and the directors manage it. Unless the articles say so (and most do not) a director does not need to be a shareholder and a shareholder has no right to be a director.
To pass company resolutions, which may be ‘ordinary’ or ‘special’, shareholders must cast their votes for or against a proposed course of action. This can be done at a general meeting or by written resolution. Ordinary resolutions require a simple majority vote (above 50%) to be passed.