Right and liabilities of a share holder

by • 06/01/2013 • GeneralComments (0)610

Q.21 Describe the right and liabilities of a share holder.

 

Ans. RIGHTS OF SHAREHOLDERS

The shareholders are the real owners of the company have the following two types of the rights.

 

(i) INDIVIDUAL RIGHTS

The individual rights of the shareholder are as under.

1. He has a right to attend the general meeting of the company.

2. He has a right to vote in person or proxy in the general meeting of the company.

3. He can criticize the policies and can suggest in the general meeting of the company.

4. He can transfer his share freely to any body.

5. He can divide when it is declared by the company.

6. He has a right to get shares, when the company declares theses

7. He has a right to accept further shares in case of right issue.

8. He can inspect record and books of accounts, as per the provisions of articles of association.

9. He can get the copies of memorandum and articles of association on the payment of prescribed fee.

10. He has right to get the annual reports of director and audited accounts of the company.

11. He has right to collect the copy of minutes of annual meeting on the payment of prescribed fee.

12. He has right to receive the copy of statutory report at least 21 days before the statutory meeting.

13. He has a right to share in the assets of the company on its liquidation.

 

(ii) GROUP RIGHTS

The following are the group rights of the shareholder as owners of the company.

1. They have a right to elect and appoint the directors of the company.

2. They can fix the remuneration of the directors.

3. They approve the dividend as recommended by the director in the annual general meeting.

4. They can apply & approve and determine the remuneration of the auditor of the company.

5. They can apply and approve the appointment of the investigator for investigating the business maters of the company.

6. They can approve the issuance of shares at discount.

7. They can approve the capitalization of profit and issuance of bonus shares.

8. They can approve the conversion of share into stock and stock into shares.

9. They can approve the alternation of memorandum and articles of association.

10. They can allow the directors of the sale and purchase of fixed assets of the company.

11. They can pass the resolution for the winding up of a company.

12. They can appoint the liquidator and can determine his remuneration.

13. They can allow the liquidators t compromise with creditors in case of winding up of the company.

14. They can approve or reject the policies of the directors in the annual general meeting of the company.

 

LIABILITIES OF SHAREHOLDERS

The main liabilities of the shareholders are as under.

 

1. In case of a company limited by shares the shareholders is liable up to the amount of their holdings.

2. In case of company limited up guarantee, the shareholders are liable up to the amount they have guaranteed.

3. In case of company with unlimited liability, a shareholder is liable to contribute to the asset of the company to an amount sufficient for the payment of its debts and liabilities and the cost, charges and expense of winding up and for the adjustment of the rights of the contributors among themselves.

4. The shareholder are bound to pay money due on shares when the company make call, if these shares were issued before the Companies Ordinance 1984.

5. They are bound to follow the decision and resolution passed by majority of the shareholders at the meetings of the company.

6. They are liable to pay the reserve capital at the time of winding up of the company.

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