Shareholders

Posted by Aaron Juckett, CPA, CPC, QPA, QKA on Tue, Mar 29, 2011
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Shareholders are a participant in the ESOP Corporate Governance process.

Role


Company Shareholders are the owners and investors of a company.


Authority


A corporation is governed by state law and the company's articles of incorporation and bylaws. The articles define the legal purpose of the business and describe the number of shares issued and voting rights. The bylaws provide more specific details on how to govern the company, including procedures on shareholder meetings and selecting and removing Directors.


Rights


Here is one dictionary’s definition of the four basic rights of share ownership:


A common shareholder is normally entitled to four basic rights of ownership:


(1) claim on a share of the company's undivided assets in proportion to number of shares held;


(2) proportionate voting power in the election of Directors and other business conducted at shareholder meetings or by Proxy;


(3) Dividends when earned and declared by the Board of Directors; and


(4) Preemptive Right to subscribe to additional stock offerings before they are available to the general public except when overruled by the Articles of Incorporation or in special circumstances, such as where stock is issued to effect a merger.


Responsiblities


The Shareholders primary responsibility is to elect the Board to govern the company. Other responsibilities include approving and amending the articles and bylaws and approving significant corporate transactions.


Stock Certificates


Each shareholder generally receives a stock certificate to identify the number of shares owned.


Ownership Culture


Please see our discussion on Shareholders and Ownership Culture.

Topics: ESOP Corporate Governance, ESOP, employee stock ownership plan

Aaron Juckett, CPA, CPC, QPA, QKA
Written by Aaron Juckett, CPA, CPC, QPA, QKA

Aaron is President and Founder of ESOP Partners and provides implementation, administration, and consulting services to hundreds of companies. He is a member of The ESOP Association (TEA) and the National Center for Employee Ownership (NCEO).

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