slide1 n.
Download
Skip this Video
Loading SlideShow in 5 Seconds..
Corporate Governance PowerPoint Presentation
Download Presentation
Corporate Governance

Loading in 2 Seconds...

play fullscreen
1 / 12

Corporate Governance - PowerPoint PPT Presentation


  • 522 Views
  • Uploaded on

Corporate Governance. Chapter 4: Shareholders. Who is a Shareholder?. A person who owns shares in a company. The shareholders must, show a greater degree of interest and involvement in the appointment of the directors and the auditors.

loader
I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
capcha
Download Presentation

PowerPoint Slideshow about 'Corporate Governance' - nowles


An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript
slide1

Corporate Governance

Chapter 4: Shareholders

who is a shareholder
Who is a Shareholder?
  • A person who owns shares in a company.
  • The shareholders must, show a greater degree of interest and involvement in the appointment of the directors and the auditors.
  • They should indeed demand complete information about the directors before approving their directorship.
slide3
AGM
  • Combined code of corporate governance makes following recommendations in respect of AGM:
    • Encourage attendance by members
    • Encourage to ask questions by members
    • One vote per share
    • Do not have to be physically present at AGM
      • Proxy form
rights of shareholders
Rights of shareholders
  • Rights, powers & obligations of shareholders will depend on the type of shares held by him.
  • Types of shares:
    • Preference shares
    • Ordinary shares
      • Permanency
      • No nominal cost
      • Residual claim on profits
      • Residual claim on assets
      • Voting power
      • Right to purchase new shares
ordinary shareholders rights
Ordinary Shareholders’ Rights
  • Permanency
    • A company that raises equity doesn’t have to plan for its repayment.
    • It has only to meet shareholders’ dividend and growth in earnings.
  • No nominal cost
    • Company is not obliges to pay any dividends to ordinary shareholders. If management of a company can convince its shareholders that it has lucrative reinvestment opportunities, the shareholders can vote to forego dividends to help build company's’ financial base.
    • Deferral of dividend payment doesn’t affect the net worth of these shareholders, infact it leads to increase in book value of shares which leads to a better market price.
ordinary shareholders rights1
Ordinary Shareholders’ Rights
  • Residual claim on profits
    • Dividends can be paid to equity holders only after all other classes of capital have been compensated.
    • This means in lean years, they will get low or nil return or in good years they will get high rate of return.
  • Residual claim on assets
    • In case of liquidation, ordinary shareholders have claim on the company’s assets after the claim of creditors and other classes of shareholders.
    • The claim of creditors and preference shareholders are limited to the nominal value of their debt or shares whereas the claim of ordinary shareholders is on all the remaining assets.
ordinary shareholders rights2
Ordinary Shareholders’ Rights
  • Voting power
    • They have a right to vote at the company’s meeting on matters like election of directors, declaration of dividends, etc
    • These voting rights are accumulative.
  • Right to purchase new shares
    • Ordinary shareholders have preemptive rights to any new shares that a company may offer for sale to public.
    • All public ltd companies are required by law to offer all new issue of shares to their existing shareholders.
    • A shareholder is not obliged to buy these new shares, he has a right which he can exercise himself or simply sell it.
slide8

Corporate Investors

  • Individual Investors
  • Institutional Investors
types of shareholders
Types of Shareholders

Corporate Shareholders:

MNCs open subsidiaries in other

countries rather than opening a

branch there but control remains with the holding company.

types of shareholders1
Types of Shareholders

These make a business of investing in shares/bonds of other companies.

They have:

Professional competence

Clout due to size of their shareholding

expectations of shareholders
Expectations of Shareholders
  • Board should be accountable to them
  • Transparency in all decision making
  • Directors are not allowed to give preference to their self-interests over company’s interest
  • Directors should manage company effectively and efficiently
  • Profits of company should be shared fairly among the shareholders