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Shareholders’ Rights Guide

Shareholders’ Rights Guide

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Introduction to Shareholders’ Rights

The guide aims to create awareness amongst shareholders of their rights in order to ensure shareholders’ participation in the affairs of the company they are in possession of, in compliance with the provisions of law. The shareholders are entitled to various provisions of the Companies Act, 2017.

The Companies Act, 2017 is an Act to reform and re-enact the law relating to companies and for matters connected therewith with an objective of regulating corporate entities for protecting the “interests of shareholders”, among others.

The exercise of these rights is encouraged and lawful for shareholders. The sections below highlight shareholders’ rights and their importance. Moreover, this guide also presents guidelines for investors in order for them to take prudent investment steps and decisions in sections further below in this document.

Scope Of shareholders’ Rights

By purchasing a share in a company, a shareholder becomes a part owner of that company and is thereby entitled to certain rights under the Companies Act, 2017. These rights include, but are not limited to:

  • Right to the offer of shares by the company at the time of further issue of shares
  • Right to receive dividends
  • Right to participate and vote in general meetings
  • Right to elect and remove directors
  • Right to contest election for the position of director
  • Right to appoint auditors and fix their renumeration
  • Right to receive residual assets post-winding up of a company
  • Right to have various periodical reports
  • Right to have access to certain information of the company

Shareholders’ Responsibilities vis a vis Governance of a Company

Shareholders can use their right to vote at shareholders’ meetings to elect the board of directors for managing the affairs of the company. Shareholders have the responsibility to oversee the conduct of the board of directors and utilize their voting rights through responsible and informed votes to safeguard their financial and company-related interests.

By using their voting rights effectively, shareholders can play a role in the governance of the corporation. Shareholders must keep a watchful eye on the affairs of the company to ensure that the management is performing its duties in accordance with provisions of the law and that the corporate governance practices meet high standards of accountability, transparency and fiduciary responsibility. Shareholders are to ensure that management performs their duties and functions in the best interest of the shareholders.

SHAREHOLDERS’ RIGHTS EXPLAINED

1. Holding of Shares +
2. Right to Receive Share Certificates +
3. Right to Receive Duplicate Share Certificates+
4. Right to Transfer of Shares+
5. Further Issue of Shares by the Company (Rights Issue)+
6. Right to be Informed on & Approve Variation of Shareholders’ Rights+
7. Right to Share in the Profits through Dividends+
8. Holding of General Meetings+
9. Right to Receive Notice & Participation in Company’s General Meetings by Shareholders+
10. Placing Items on the Agenda of a Meeting+
11. Passing of Ordinary Resolution at a Company’s General Meeting+
12. Passing of Special Resolutions at a Company’s General Meeting+
13. Right to Seek Court Declaration to Invalidate the Proceedings of a General Meeting+
14. Rights of Voting of Shareholders+
15. Right to Appoint the Proxy+
16. Right to Demand a Poll on any Resolution+
17. Right to Request Certified Copy of Minutes of any General Meeting+
18. Right to Apply to the Commission to Call Overdue General Meetings+
19. Right to Appoint and Remove Auditors+
20. Right to Contest for Election to the Board of Directors+
21. Voting in Separate Categories for Female and Independent Directors in the Election of Directors+
22. Right to Elect and Remove Directors+
23. Right to Apply to the Court for Declaration of Election of Directors as Invalid+
24. Right to Receive or Obtain Copies of Financial Statements & the Auditor’s Report +
25. Right to Obtain Copies of Memorandum & Articles of Association+
26. Right to Inspect Company Documents and Returns+
27. Right to Apply to Court for Rectification of Register of Members+
28. Right to Apply for an Investigation into the Affairs of the Company+
29. Right to Lodge a Complaint with the Registrar for Prevention of Oppression and Mismanagement+
30. Right to Residual Assets at the Time of Closing Down of Company+
31. Status of Companies Being Wound-Up+
32. Right of Joint-Holders+
33. Right to File a Winding-up Petition+