A Company is Not the Property of Its Shareholders

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A Company is Not the Property of Its Shareholders

1. INTRODUCTION:

In this report I am going to discuss one new concept of Company which is whether a company is the property of its shareholders or not. Shareholders of a company have their specific rights which are ensured by law . First I will explain about what shareholders of a company are able to do and than about the ethics and social responsibility of the company which will help to come up with a decision for this argument.

History discovers that although some forms of companies are thought to have existed during Ancient Rome and Ancient Greece, the closest recognizable ancestors of the modern company did not appear until the second millennium. Early companies were purely economic ventures; it was only belatedly realized that an incidental benefit of holding joint stock was that the company's stock could not be seized for the debts of any individual member .

Previously company was thought as the property of its shareholders but now according to the new socio-economic thinking, is a social institute which has responsibilities towards society, not only it has responsibilities towards the workers but also towards the consumers and other members of the community .

2. PART A: DEFINITIONS AND PHILOSOPHERS’ VIEW

Lord Justice Lindley defines a company as follows: By a company is meant an association of many persons who contribute money or money’s worth to a common stock and employ it for a common purpose .

Companies are distinguished for legal and regulatory purposes between public companies and private companies . And public companies may be classified into three types; a) companies limited by shares, b) companies limited by guarantee and c) unlimited companies. There cannot be a private company with unlimited liability.

3. PART B: THE LEGAL STATUS OF SHAREHOLDER RIGHTS

A shareholder (or stockholder) is an individual or company (including a corporation) that legally owns one or more shares of stock in a joint stock company. Companies listed at the stock market are expected to strive to enhance shareholder value .

Shareholders have right to vote (usually one vote per share owned) on matter such as election of Directors , Fundamental Transactions , Proxy Rules etc.; sell their share at any times to generate profit as well as the right to share in distributions of the company's income, the right to purchase new shares issued by the company, and the right to a company's assets during a liquidation of the company .

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