SHAREHOLDERS

Meaning
Purchase stock within a corporation and are the legal owners of that corporations assets.

Ownership and Responsibility

Legal owners of the corporation. Involvement in company activities is limited. Not involved in the operations of the corporation. Involved in election of the board of directors. Voting on proposals.

Ownership and Responsibility

The real value of the stocks is limited to dividend payment, share resell and potential asset value division at the dissolution of the corporation.

Rights of the Shareholders

The right to receive information. The right to elect board members. The right to submit and vote on policy proposals.

Receiving Information
Shareholders expect to receive accurate information regarding the corporations policies and particularly its financial situation. Receive information through annual shareholder meeting and annual and quarterly reports.

Board Elections
Shareholders elect board members who they believe will take good care of their investment. In most situations, elect board members who are screened by the sitting board members. If shareholders nominate potential directors, the board will screen it before being included on the ballot.
7

Problems in Electing
Inadequate information about prospective directors. An inability to nominate candidates.

Appointing a New Board Member

The BODs are very important for governing the corporation on behalf of the investors. With the title comes great responsibility.

Process when the directors term ends

Determine if the incumbent director would like to apply for reelection. Determine if the incumbent director is suitable for reelection in terms of history, current circumstances, and the circumstances of the board and the corporation. Begin the search for new director nominees, requesting nominations from shareholders, executive members, other board members.
10

Process when the directors term ends

Screen potential nominees and create a short list. Establish a recruitment strategy for potential nominees and create a finalized list of eligible and willing candidates. Communicate the identities and profiles of nominees to the shareholders before the annual shareholder meeting.
11

Process when the directors term ends

Submit the list of the director nominees to the shareholders at the annual shareholder meeting.

12

Proposal Submission and Voting

The proposals which are fit for the corporation, are put forward by the board. Voted by the shareholders. Protocols (set of rules) are required for shareholder proposals. Without adherence to these protocols, the proposals are not considered by the board.

13

Rules for Governing Proposal Submission

The shareholder must own at least 1% of the companys stock, have owned it at least one year, must commit to continual ownership through the voting date. The shareholder may not submit more than one proposal per voting period.

14

Rules for Governing Proposal Submission

The proposal may not be more than 500 words in length. Must not relate to any prohibited proposal content.

15

Changing Level of Shareholder Involvement

Shareholders are no longer willing to be passive members of the corporation. Shareholders have voting rights on proposals, right to nominate, elect board members. Right to form advocacy groups to support their own cause. In some corporations shareholders can purchase shares which do not have voting rights, but pay dividend.
16

Shareholder and Stakeholder

Shareholder- has purchased the stock of a publicly traded company. Stakeholder- anyone who has a vested interest in the company. Not all stakeholders own shares. Vested interest -The lawful right of an individual or entity to gain access to tangible or intangible property now or in the future
17

Duties of the BOD

To protect the shareholder interests, the board is assigned two duties: Duty of Loyalty- the board and its members are required to act on behalf of shareholder and company interests, rather than their own. Duty of Care- requires that the company directors make reasonable efforts to care for the companys interests.
18

Duties of the BOD

Board members who do not meet these duties can be dismissed.

19

Shareholder Meetings
Attended by the shareholders. To gain information and cast votes. Protect the investors investments. Shareholder meetings can also be unproductive, when not run effectively.

20

Summary
Shareholders are the legal owners. A fundamental part of the corporate structure. Their position is unique. Do not hold legal or financial responsibility over the corporations actions or events. Limited avenues for monitoring corporate activity and being involved in the company decisions.
21