What Do You Know as a Shareholder in a Company?

Shareholders are the owners of the company as they have the shares that constitute the company. With this in mind, I would like to stress the point that it is important for each shareholder, particularly, in joint-stock companies to learn that the company law gives shareholders certain legal rights and protection against some specifics by the company or the Board or other 3rd parties.

The shareholders, it goes without saying, are supposed to know their rights and their duties as well, in their company.

The statutory protection given to shareholders is provided for in the company law, wherein, the different assemblies of the company are not authorised nor allowed to take, add or amend any of the legal rights conferred on the shareholder by the law particularly the company law. 

This important statutory right has been vested with all shareholders regardless of the fact that they are individuals or institutions, small or big, smart or dull, active or otherwise, etc.

This legal stand constitutes a healthy environment and should give each shareholder the necessary boost and charisma to preserve such statutory rights and to maintain them all through his holder-ship. 

It would be very interesting to mention that many shareholders in many companies are either ignorant about this de jure situation or merely they don’t understand that this statutory right and privilege should be maintained and exercised all through their equity shareholding.

In certain instances, it has been observed that the general assembly has gone astray in relation to certain rights of shareholders.

 A good example, could be the emergence of certain discussions in some issues during the general assembly and their refusal for discussion because they are not included in the agenda as required by the law. This could be a good excuse to escape from the situation.

This practice, to my knowledge, happens frequently as there is provision that says, only issues in the agenda are to be discussed. 

However, this provision should not be taken as absolute prohibition otherwise this will be against the intention of the lawlegislature. It should be clear that decisions or resolutions taken in such instances could be considered illegal, void “ab initio” and of no effect. Particularly, when such matters raised for discussion are of prime importance for the company and or there is urgent need to discuss and deliberate during the on-going session. 

The door for discussion should be open and not closed for good. The chairman presiding the session should have a key of wisdom and professionalism.

The shareholders statutory rights are many, such as the right to attend meetings, right to participate in discussions, right to call for meetings due to certain reasons and ultimately, the right to exercise the voting powers and the like.

At certain times there could be difference of opinion in relation to certain issues between the Board, the executive management on one hand and shareholders on the other hand. We believe this is normal and encourageable, however, the differences shall not affect or jeopardise the statutory rights given to the shareholders as attending assemblies or participation in discussing any issue during meetings. 

Differences or disagreements could happen when the shareholders are active or knowledgeable, for example, when the company is planning a merger or acquisition, increase or decrease of the capital or involvement in mega projects, etc.

There are examples wherein extensive debates had been going on in many countries between the shareholders and the management regarding such important issues. 

Some companies, have changed or stopped certain projects after facing justifiable resistance from the shareholders. 

Each shareholder, and likewise each company, shall work to achieve this result in good faith and high spirit to the betterment of the company and the shareholders who own the company through all tenure.