Question

If the controlling majority of a corporation's stockholders vote to re-invest profits in a way that benefits employees or society, rather than disbursing that money to the shareholders, should that action be allowed? If the majority stockholders are not benefiting in an unfair manner by this decision, why should the minority have the ability to overturn the majority vote?

Should corporate income be double-taxed? Why or why not?

Should corporations enjoy the same freedom of speech rights that natural persons enjoy? Why or why not?

Answer 1

Share holders are the basis upon who the company depends for its financial needs. When an individual buys shares in a company, it also provides them with a right to vote in decision matters based on the number of shares he/she owns. There are a few members that own more shares of the company and thus have a higher say in it.

As mentioned in the question, if a controlling majority of shareholders decide to re-invest in the profits in way that it can helps others and not take it for themselves, lawfully they can take that decision and along with the management of the company re-invest the profits that have been made. This right comes to them as they own higher number of the company’s/cooperation’s shares

Lawfully when an individual buys shares or invests in a company, he has the right to vote for or against a said decision or opinion regarding certain company matters. When a decision is made, s/he has the right to vote for or against it. Now we will use an example to understand why a majority of the shareholders have the legal right to over rule the decision of the majority share-holders.

Company A has issues 100 shares for public to buy. A total of 10 people invest in the firm such that 2 people own 55 shares and the rest 45 shares are held among 8 people. Here it is clear that 2 people together hold the majority of the shares. And the remaining 6 people have lesser shares. In a situation stated in the question, in my opinion the 6 people should be allowed to have the power to over rule the decision made by 2 individuals since the number of people who are not benefitting from the decision are more. The basic reason why people invest in companies is to earn a profit/dividend from it. The decision made by the 2 members who hold most of the shares goes against the basic objectives of investing.

In my opinion the income of the company’s income is already taxed and so is the dividend that investors or shareholders receive. If a decision is made to reinvest the profits, that re-invested amount should not be taxed as it has already been taxed at both the previous stages/levels. Taxing this amount would mean the same amount is taxed 3 times and this may not be as helpful as expected since a lot of the portion of the profit is lost in the form of taxes

An individual through its freedom of speech has the right to speak out its opinions on matters, put forth suggestions and areas of improvement, to comment on matters that are beneficial to himself /herself. An organization in a similar way is a separate entity, every level, even the BOD (board of directors), shareholders receive an income in various forms. The management that actually runs the company and who know the strengths, weaknesses, opportunities and threats (SWOT) should have the freedom of speech. The real-world situation does not allow for it, with orders coming in from the higher levels. This freedom of speech would actually benefit the company and in turn all of its stake holder.