Question

Identify and provide an example for each of the five major legal rights afforded to shareholders.

Answer 1

These are the following types of Stockholders-

1. Individual stockholders are people who directly own shares of stock issues by companies
2. Institutional investors like pension funds, mutual funds, insurance companies, university endowments.

Stockholders have five major legal rights afforded to stockholders.

1. Receive dividend (if pre decided)-

Example- Companies is responsible for paying dividend for investors. Therefore, stockholders have right to gain the dividend.

2) Voting rights-

Example- Stockholder have rights to vote members of the board of directors, major mergers and acquisitions, charter and bylaw changes, proposals by stockholders.

3) Receive annual report –

Example- It can review company’s financial condition.

4) Bring shareholder suits against the company and officers-

Example- In the case of violation of right shareholders can suit a case against to company members.

5) Sell their shares of stock to other-

Example- Shareholders can sales or transfer their share to other peoples.