Role of Shareholders

A major problem in corporate governance today is the degree of stockholder participation. On one hand, it is widely agreed that a stockholder with boards and business managers makes stronger with a good outcome and ruling. On the other hand, more than enough stockholders coming between groups may result from the outcome in great value management time or loss of the boards. So, while the corporation boards have a responsibility in the direction of protecting the interest of shareholders and increasing clarity management may not always support to be driven by the shareholder point of view or give in to all shareholder’s demands. It is hard to measure the detailed extent of suitable levels of stockholder company that will allow achieving effective administration and to business value. This article has a look for the role and different roles of stockholder rights and duties can play an important role in the management of companies. 


This article presents the role of shareholders in the corporate governance mechanism. The article attempts to the rights and duties of the stockholders. The object of the corporate law in India is to give power to the shareholders to the board according to their desires and replace them whenever they are not pleased with the operation of the board.

In short, united as a body governed by all with equal rights is the put forward way of managing the company. Two types of shareholders are in existence viz. Individual shareholders and organization owners of the company. Their roles in corporate governance have analyzed the role of a stockholder of a company in corporate governance in India. This article gives out with corporate governance and talks about shareholders Rights under companies Act, 2013.

Role of a Shareholder

The shareholders are the owners of the company and furnish money business backing in profit and potential dividends over the for all one’s existence of the company. A person or corporation can become a stockholder of the company in three ways: by subscribing to the MOA of the company during incorporation. 

Investors make a money related interest in the undertaking, which gives the right to those with giving support to offers to select the chiefs. Investors do not normally commonly have any rights to be included especially in organizations controlling organizations. Their association with the organization controlling organization is normally by way of the board of directors. If investors are not happy with the execution of the executives, they may evacuate the chiefs or sloping down to re-choose them. Investors are the owner of the undertaking. They have control rights in the offers of corporate as a body stock. The part of the one putting money into the business in the company is limited, be that as it may, as they have neither the special right nor the undertaking to do give out with the everyday business of the attempt one putting money into the business be different form according to the sort of the stock claimed and to the point of state law. State law is strongly impacted by the low starting points. For example, the model business act (Model Act). 

Any public limited or private limited company has shareholders who send in the capital in the direction of the frame for setting up and running of the company while in case of private limited companies the stockholders are usually the one starting businesses and a few close friends, family, the public limited companies have a large body of stockholders outlined from all walks of life. The stockholders of any corporation have a responsibility to make certain that the company as well run and well managed. They do this by looking at the operation of the company and getting lifted, higher their objections, or giving their approval to their actions of the business. Business managers of the company in view of the fact that many shareholders act through organization and large investors as their representative’s small group shareholders have the thing for which selection is made of sending at a special quick rate either their a bad opinion of or agreement at the Annual General Meeting of the companies. 

The idea of having shareholders for the companies is to make the companies accountable for their acts. As talked about over, on the top the shareholders are usually represented on the board of directors’ act as the caretaker of a public building for a shareholder of company interests. 

In cases, the board is not taking to the requests of the owners of the company the shareholders can act directly by making a request the business managers to make to come together with a special general meeting so that they can voice their opinions. In recent months, the Indian it tendencies-guide, Infosys has been facing the heat from the stockholders because of its very great money reserves where the shareholders have demanded that the company buy back some of the shares to compensate for the sleeping down dividends and falling stock prices. 

Rights of Shareholders’

There are different rights accessible to the shareholder. Various types of rights have been discussed below: 

1. Appointment of Directors

Owners of a company play an important part in the position given of ones in control. A normal resolution is needed to be passed by the shareholders for the position given. Apart from this, shareholders can also fix different types of directors They are:

(I). An addition of person in control who will place in the ship for goods the office until the next general body meeting. 

(ii) An alternate person in control who will act as an alternate direction for a period of 3 months. 

(iii)Nominee person director. 

(iv)Director having all necessary things in the case of a by chance position for which someone is needed in the office of any person in control having all necessary things in a general meeting in a public company. 

Apart, from this shareholder of the company also can physical acts offer any resolution passed for the position given of a person in control in the general body meeting. 

2. Lawful Action Against Directors

Shareholders also can take lawful action against the person in control by the rules put down in the companies act, 2013. They are:

(I) Any act was done by the person in control in any way which damaging against the affairs of the company. 

(ii)Any act is done which is beyond the law or against the Constitution. 

(ii) Fraud

(iv) when the properties of the company are being got moved from one position to another at an undervalued rate. 

(V) when there is an attention troubler of funds of the company. Any act is done in a mala fide manner. 

3. Appointment of Company Auditors

Shareholders also have a right to fix the company auditing under the companies’ act 2013, the first auditing of the company is to have all necessary things by the board of ones in control. Further, the shareholders at the Annual General body meeting at the statement of directors and looking over all accounts by the expert committee. The position given is generally done for 5 years and further, can be up kept by going past, through a resolution in the annual General body meeting. 

4. Voting Rights

Shareholders also have the right to give attention to and give support to the annual general body meeting. Every company recorded, listed in India should do as requested with statements in the law of the companies act, 2013. It is ordered for every Indian company to carry an annual General meeting once in every year. The meeting can be kept anywhere at the head office of the company or any other place as given by the company. At the meeting, there are different compulsory schedule which is to be discussed. These include the adoption of money business statements time or making clear again of directors and auditors. 

1. When a resolution brought by members of a company then according to companies act, 2013. It can be passed only by the means of giving support to by the owners of companies. Companies act, 2013 takes consciously coming here types of voting:

• Voting by Show of Hands: Every member present in the meeting has one give support to. So, in this type of giving support to shareholders give support to just by showing hands. 

• Voting Done by Polling:  In this type of giving support to the organization chief or the shareholder’s request for an opinion. However, in case of differential rights in connection with giving support to a class of equity shares may also have weighed giving support to rights. 

• Voting Done by Electronic Means: Means every company that has more than 1000 shareholders must put up an amenity of giving support to through on-line suggests. Every member should be on the condition that with the means of giving support to online. 

• Voting with the Help of the Postal Ballot recording of opinion any resolution in the meeting can also be passed with the help of the postal ballot. 

A shareholder of the company also has a right to fix person acting in place of another on his in the name when he is unable to give attention to the meeting through the person acting in place of another is not let to be included in the necessary number (of persons) of the meeting of support to, it is let by coming here – after a procedure talked-about on companies act, 2013. 

5. Right to Call for a General Meeting

Shareholders have the right to name a general meeting. They have a right to direct the person in control of a company to can all special general meetings. They also can way in the company law board for the conduction of general body meeting if it is not done according to the rules-given requirements. 

6. Right to Carefully Look at Records, Lists, and Books: As shareholders are the main interested organizations in a company they have the right to carefully look at the accounts register and also the books of the firm and can ask questions about the same as they have a feeling of so. 

7. Right to get Copies of Financial Statements

Stockholders have the right to get copies of the money business it is the act to be done by the company to send the financial statements of the company to send the money business statements of the company to all its shareholders either in a quarterly or annual statement. 

8. The Winding of the Company

Before the company is wound up the company must give details to all shareholders about the same and all the credit must be given to all the owners of the company. 

Other Shareholders Rights

1. When the exchange of goods for money of any material of any company is done then the shareholders should get the amount which they are given the right to receive. 

2. When a company is got changed into another company then it has needs before approval of owners of the company. In addition, all the position given must be done according to all the procedures and auditors and directors must be done. 

3. Right to the way in the court of insolvency. 

Owners of Company Duties

There are also Responsibilities and duties of shareholders which they should act in addition to several rights which they have, there has existence several acts to be done they are:

• Shareholders should take part in the general body meeting so that they can see and can give an opinion on the matters which they have a feeling of is not giving good. 

• Owners of the company should give an expert opinion on the matters of controlling money and other interests. 

• Owners should be in touch with other members of the company so that they can see the work progress of the company. 


Owners of the company thereby play an important part in the working of a company. They have different rights which include the position of the company’s personnel director, auditor, etc. to voting rights and having tells when the company goes moneyless with every right comes to a corresponding responsibility which the stockholder must do in a hard-working way shareholders of the company are the owners of companies. They are the residual claimants as an outcome of that they must review the operation of the board. 


Ques. 1 Who is a Stockholder? 

Ans.  A stockholder can be a person, company, organization that holds stocks in each company. A stockholder must own a minimum of one share in a company’s stock or common fund make them a partial owner. Stockholders receive declared of the company does well and comes after takes the place of. Also named a shareholder, they have the right to give ballot on certain matters within connection with the company and to be selected to a seat on the board of directors. 

If the company is getting done the wind-up and its Properties are sold the stockholders of the company may receive a part of that money on condition that the creditors have already been got payment. When such a place, the position comes about the advantage of being stockholders lies in the fact that they are not made to shoulder the debts and financial obligations caused by the company which means the creditor cannot force shareholders to money given for work them. 

Ques. 2 Can the Stockholder be a Director? 

Ans. The stockholder and director are 2 different things, though a stockholder can be a person in control at the same time. 

The stockholder as already talked about is a Part-owner of the company and is given the right to privileges such as receiving profits and putting to use control over the management of the company. A director, on the other hand, is the person in control on the other hand, is the person hired by the stockholders to act responsibilities that are related to the company’s daily operations with the purpose of getting more out of its status. 

Ques.3 What is the Minimum No. of the Stockholders in a Company? 

Ans.  The minimum no. Of stockholders in a company depending on the type of a company:

1. One for a one-person company. 

2. Two for a private limited company. 

3. Seven for a public limited company. 


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