3. shareholders (also known as shareowners) and those who manage shares
for others need to know their rights as shareholders in order to make
informed, responsible investment decisions. This requires reasonable and
timely access to sufficient information about issues affecting their
investments, and an understanding of the engagement customs and legal
and regulatory framework of the market(s) in which they invest.
In order to properly exercise their rights, shareholders need to
know such information as any limitations on their rights, whether
a company elects directors using a majority-voting standard, their
eligibility to approve significant company transactions, any ability
to submit dissident resolutions at an annual meeting, how to
participate in share voting − in person or otherwise − and
opportunities and responsibilities for shareholder engagement in
such cases as cumulative and confidential voting or advisory votes
on compensation.
4. PROXY VOTING SEC - 105
• Proxy voting has been defined by the International Securities Services Association as “the exercise of the voting right(s) of an
investor in shares, bonds and similar instruments through a third party, based on a legally valid authorization and in conformity
with the investor’s instructions.” Depending on the country in which the “proxy” is being exercised, the “third party” can be a
bank, or a person designated by the company, or another shareholder.
• Proxy voting generally takes place at shareholders’ meetings of companies (annual general meetings and extraordinary general
meetings) for the purpose of approving or rejecting certain pre-advised resolutions. Incidentally the same principles generally
apply to bondholders’ meetings (e.g. in the case of bond issues that are in default and voting about restructuring measures), in
which case a special creditors’ representative may publicly offer to represent bondholders.
• Proxy voting can be subject to more or less stringent restrictions depending on national legislation and company by-laws. In each
case, therefore, the legal aspects must be carefully examined. It is also worth noting that in some countries, for instance the USA,
voting on company matters is actively encouraged.
5. COMMON
SHAREHOLDER
RIGHTS
• Voting power – This is one of the most fundamental rights vested
on common shareholders. They are legally required to vote on
proposals that may affect the company in elemental ways (eg.
mergers, liquidation). Shareholder voting rights are exercised
during the company’s Annual General Meetings (to be discussed
in detail in later sections). If the shareholder is unable to be
present in person, voting by proxy or via email is also considered
valid.
6. .
•Appointment of Directors and company auditors –
The board of directors are appointed by the
shareholders. Since the BOD is vested with sufficient
power to run the company operations, they may turn
against the shareholders in case they start acting out
of personal interest. So to protect the interests of
shareholders, actions of the BOD are set up in a way
that they are legally binding. It is the same for the
appointment and liabilities of company auditors as
well.
7. .
• The right to transfer ownership – Common shareholders
can buy or sell stock in the market as this is how they
exercise their right of transferring ownership. As simple
as this may sound, having this right is crucial especially in
times of liquidation. Unlike fixed assets, common
shareholders can quickly move their money invested in
company stocks.
8. .
• Opportunity to inspect Corporate books and
records – Common shareholders have the right
to examine basic company documents such
as company bylaws and board meeting minutes. This
is a process of providing them access to the overall
operations of the company.
