Shareholders’ Rights in Private and Public Companies

  • Aabir Shoaib
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  • Aabir Shoaib

    Student at Chandigarh University, India

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Abstract

Companies in India are largely created and regulated by the Companies Act 2013. In India, there are two major categories of corporations, private limited companies and public limited companies which are limited either by shares or by guarantee. In both of these companies, shareholders play an extremely crucial role. A shareholder, also known as a stockholder, is any person, corporation, or entity who owns at least one share of the underlying capital of a corporation. Recently, factions of shareholders of some firms have waged their battles in the mainstream media. Despite more than a hundred clauses in the Companies Act specifically outlining shareholder rights, shareholder democracy has not yet been successful due to a lack of vigorous and well-developed shareholder sentiment. In India, the same applies with similar authority. A big company's shareholders do not choose to attend general meetings when much of the authority is concentrated in the hands of the directors or majority shareholders. They are only concerned with the valuation of stock and dividends. When they learn that they are not earning a reasonable yield or that the valuation of their stock has no chances of growing in value, they transfer their investment to shares of other firms . It is critical for a company to look after them because they play an important part in the company's structure and earnings. They are the company's key owners and should be protected and rewarded on a regular basis. Shareholders ought to know about the limitations on their rights, whether a company appoints directors using a majority-voting system, their capacity to approve impact organizational transactions, their ability to submit dissenting resolutions at an annual general meeting, how directors using a majority-voting system, their capacity to approve impact organizational transactions, their ability to submit dissenting resolutions at an annual general meeting, how to participate in share voting – in person or otherwise – and strategies in order to effectively assert their rights This article seeks to elaborate the concept of shareholders and their importance in the corporate sector of the country and because of the division of ownership and management, as well as the dispersion of shareholders across the world, it is important for shareholders to recognise their rights, privileges, and liabilities.

Type

Research Paper

Information

International Journal of Law Managment and Humanities, Volume 4, Issue 3, Page 3530 - 3537

DOI: https://doij.org/10.10000/IJLMH.11811

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This is an Open Access article, distributed under the terms of the Creative Commons Attribution -NonCommercial 4.0 International (CC BY-NC 4.0) (https://creativecommons.org/licenses/by-nc/4.0/), which permits remixing, adapting, and building upon the work for non-commercial use, provided the original work is properly cited.

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