Persons who own ordinary shares of the company are treated as the true owners of this company. As such, a common shareholder has certain privileges and rights, which are governed by the laws that prevail in the state where the company is based.
The most important rights that all common shareholders have the right to include shares of earnings, income and assets, the degree of control and influence on the choice of the management company, right of pre-emption of newly issued shares and the General meeting the right to vote.
Right to share in the profitability
As partial owners of the company, common shareholders are entitled to participate in the profitability of the company as long as they own shares. Profit distribution is based on the number of shares owned by the shareholder, and the profits can be substantial for shareholders over time.
In addition to a share in the profits obtained by the company, shareholders are also entitled to the distribution of income through dividend payments. If the Board of Directors announces the payment of dividends for a certain period, common shareholders are in line to receive it.
However, dividends are not guaranteed. If the company is liquidated, common shareholders are entitled to assets and profits of the company after bondholders and preferred shares are paid.
The right to influence the management of
Common shareholders have the right to influence the management of the company through the election of the Board of Directors of the company. In small companies, the President or the Chairman of the Board of Directors is usually the person who owns the largest stake. Large companies can have greater variety in General, the shareholder pool of investors.
In any case, people in the management of the company do not own enough shares in companies to influence who sits on the Board of Directors. Shareholders have the right to influence who occupies a leadership position through its control of the election of members of the Board of Directors.
Right to purchase new shares
Common shareholders also have the preemptive right. If the company issues new shares to the public, current shareholders have the right to purchase a certain number of shares to shares to potential new shareholders. Pre-emption right may be useful for shareholders as they are often provided at a subscription price per share.
The right to vote
Perhaps, the greatest right for the holders of ordinary shares is the ability to vote in annual or General meeting. Major shifts in public company must vote before changes can occur, and common shareholders voting either in person or by proxy. Often shareholder voting rights equal to one vote per share owned, resulting in more influence from shareholders, which own a large number of shares.
The right to sue for wrongful acts
Common shareholders who believe that their rights have been violated have the right to sue the company-Issuer. The court has the right to exercise General powers of shareholders of a Corporation found to be in violation of their rights, either through the uniform complaint of the shareholder or class action lawsuit.