Shareholders-individual or institutional-hold ownership in a company and are protected under the Companies Act, 2013, SEBI regulations, and the company’s Articles of Association. They enjoy several key rights but also have important responsibilities.
Below are the key rights and duties all shareholders should be aware of:
1. Right to Vote
- Shareholders can vote on major corporate matters, including:
- Appointment/removal of directors
- Approval of financial statements
- Mergers, acquisitions, and restructuring
- Amendments to the Memorandum or Articles
- Voting can be done:
- in person at the Annual General Meeting (AGM)/Extraordinary General Meeting (EGM)
- Through a proxy,
- Via e-voting, as mandated by SEBI/Companies Act.
2. Right to Dividends
- Shareholders have the right to receive dividends declared by the company’s board out of its profits.
- Dividends must be paid within statutory timelines.
- Shareholders are entitled to timely and accurate information about the company’s performance including:
- Annual reports and audited financial statements
- Quarterly results (for listed companies)
- Disclosures made to stock exchanges
4. Right to Attend and Participate in Meetings
- Shareholders can attend AGMs/Extraordinary General Meetings (EGMs) and:
- Ask Questions
- Seek Clarifications
- Comment on agenda items
5. Right to Transfer Shares
- Shareholders can freely buy and sell shares unless there are restrictions in law or in specific agreements (e.g., shareholders’ agreements).
6. Right to Receive Corporate Benefits
- Shareholders are eligible for
- Bonus Shares
- Rights issues
- Stock splits
- Buybacks
- Any other legitimate corporate actions announced by the company.
7. Right to Inspect Records
- Shareholders can inspect certain records, such as minutes of general meetings, the register of members and Statutory registers available under the Companies Act.
8. Right to Seek Remedies
- Shareholders can approach SEBI, the National Company Law Tribunal (NCLT), Civil courts (where applicable), Stock exchanges for listed-company related grievances in cases of oppression, mismanagement, or violation of their rights.
Key Responsibilities of Shareholders
1. Payment Obligations
- Shareholders must pay the full amount on shares they subscribe to or buy (for partly paid shares).
- It is the shareholder’s duty to keep addresses, bank account details, pan no., email, phone number and nominee information current with the company and depository.
3. Participating in Meetings
- Shareholders are encouraged to participate in meetings and exercise their voting rights responsibly.
4. Compliance with Insider Trading Rules
- Shareholders who have access to unpublished price-sensitive information must not trade on such information.
- They must follow the SEBI (Prohibition of Insider Trading) Regulations.
5. Adhering to Company Rules
Shareholders must follow the company’s Articles of Association, applicable policies and any applicable agreements.
In summary:
Shareholders have the right to vote, receive dividends, access information, and benefit from company growth. At the same time, they must act responsibly, comply with laws, and uphold fair practices to protect the interests of all stakeholders.