Common shareholders six main rights

Assignment Help Operation Management
Reference no: EM132234120

Common Shareholders’ Six Main Rights

Voting Power on Major Issues. This includes electing directors and proposals for fundamental changes affecting the company such as mergers or liquidation. Voting takes place at the company’s annual meeting. If you can’t attend, you can do so by proxy and mail in your vote.

Ownership in a Portion of the Company. Previously, we discussed the event of a corporate liquidation where bondholders and preferred shareholders are paid first. However, when business thrives, common shareholders own a piece of something that has value. Said another way, they have a claim on a portion of the assets owned by the company. As these assets generate profits, and as the profits are reinvested in additional assets, shareholders see a return in the form of increased share value as stock prices rise.

The Right to Transfer Ownership. Right to transfer ownership means shareholders are allowed to trade their stock on an exchange. The right to transfer ownership might seem mundane, but the liquidity provided by stock exchanges is extremely important. Liquidity – the degree to which an asset or security can be quickly bought or sold in the market without affecting the asset’s price – is one of the key factors that differentiates stocks from an investment like real estate. If you own property, it can take months to convert your investment into cash. Because stocks are so liquid, you can move your money into other places almost instantaneously.

An Entitlement to Dividends. Along with a claim on assets, you also receive a claim on any profits a company pays out in the form of a dividend. Management of a company essentially has two options with profits: They can be reinvested back into the firm (thus, one hopes, increasing the company’s overall value) or paid out in the form of a dividend. You don’t have a say in what percentage of profits should be paid out – this is decided by the board of directors. However, whenever dividends are declared, common shareholders are entitled to receive their share.

Opportunity to Inspect Corporate Books and Records. This opportunity is provided through a company’s public filings, including its annual report. Nowadays, this isn’t such a big deal, as public companies are required to make their financials public. It can be more important for private companies.

The Right to Sue for Wrongful Acts. Suing a company usually takes the form of a shareholder class-action lawsuit. A good example of this type of suit occurred in the wake of the accounting scandal that rocked WorldCom in 2002, after it was discovered that the company had grossly overstated earnings, giving shareholders and investors an erroneous view of its financial health. The telecom giant faced a firestorm of shareholder class-action suits as a result. More recently, Wells Fargo & Co. has been hit with shareholder class-action suits for misleading investors about its financial performance and fraudulent sales practices.

Reference no: EM132234120

Questions Cloud

Compare different intrusion detection systems : Compare 2 different Intrusion Detection Systems. List the benefits and drawbacks of each system and explain which system you would choose for your company.
Organization purpose and process of making the decision : Fully explain the organization's purpose and the process of making the decision.
What strategy is used to prevent or deal with the issue : ITS-632 Provide two (2) examples of measurement or data collection issues that may hinder data quality. Provide the term, how it hinders data quality.
Discuss crisis of ethics from recent government action : Discuss a "crisis of ethics" from a recent government action/event and a corporate action/event.
Common shareholders six main rights : Voting Power on Major Issues. This includes electing directors and proposals for fundamental changes affecting the company such as mergers or liquidation
Describe a current it-related ethical issue : Describe a current IT-related ethical issue: Since this is a paper exercise, not a real-time situation, you may want to construct a brief scenario.
Company limited by shares has limited liability : A shareholder of a company limited by shares has limited liability.
Company productivity before the change in work rules : Calculate the company’s productivity before the change in work rules and after the change. What is the percentage increase in productivity?
Why would you need to review physician contract : Why would you need to review a physician's contract with the third-party payers, and when is the best time?

Reviews

Write a Review

 

Operation Management Questions & Answers

  Stands convicted for the heinous murder

Fozze Bear, stands convicted for the heinous murder of Miss Piggy. Your supervising attorney is filing an appeal based, in part, on negative comments made by the prosecutor regarding Mr. Bear. Apparently, prosecution referred to the defendant as “evi..

  Propose the necessary major steps-including education

Suggest two (2) global changes in expansion, technology, marketing, products, services, human resources, and customer service, etc.

  Does the branding appeal to the market

Select an existing health care related product or service: What is the target market of the product or service selected? What images or thoughts do you relate to that brand? Does the branding appeal to the market? Do those images influence consumers’..

  Regulate and control the compensation for executives

Do you think the federal government should regulate and control the compensation for executives? Why, or why not? If you are in favor of this idea, please share your ideas on how this could be done.

  How can boreki use this information

Boreki Enterprise has the following 1 0 items in inventory. Theodore Boreki asks you, a recent OM graduate, to divide these items into ABC classifications.

  Forces interact with the international business environment

Explain: How does the Porter’s 5 forces interact with the international business environment, how/why does it works? Use examples.

  Operations and information systemsnbsp midterm

operations and information systemsnbsp midterm assessmentmanufacturingservice process design is based on a

  Firm decides whether to produce products by onshore plant

A firm decides whether to produce products by an onshore plant or an offshore plant.

  Recently been on the internet looking for wedding gown

Ayisha has recently been on the Internet looking for a wedding gown. She is now on the Internet looking for camping supplies she will need for an upcoming trip.

  What types of projects at company would favor pert over cpm

What types of projects at this company would favor PERT over CPM? Why? What types of projects at this company would favor CPM over PERT? Why?

  Customer segments for the smashbox and aveda cosmetics lines

Discuss the characteristics and likely differences in customer segments for the Smashbox and AVEDA cosmetics lines.

  Describe the strategic technology-based alliances

Describe the strategic technology-based alliances of Amazon or Dell Computer eStore, and describe the competitive advantage.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd