Individual Shareholder Rights

Submitted by: Aleena Placid

 Synopsis
● Introduction
● Types of shareholder rights
● Protecting shareholder rights
● Challenges and Issues
● Case laws
● Conclusion
● Questions
 Introduction

● These rights protect the interests of shareholders and give them

a say in the company's management and decision-making
processes.
● Individual shareholder rights are legal entitlements and
privileges that individuals who own shares in a company
possess.
● Shareholder rights are the privileges granted to individuals who
own shares in a company.
● These rights enable shareholders to participate in key
decision-making processes and protect their interests.
● They play a crucial role in ensuring transparency,
accountability, and fairness within a company.
 Types of Shareholder Rights

● Voting Rights: Shareholders have the right to vote on

important matters, such as electing directors or approving
mergers.
● Dividend Rights: Shareholders are entitled to receive a
portion of the company's profits as dividends.
● Information Rights: Shareholders have the right to access
relevant company information, such as financial reports and
disclosures.
● Preemptive Rights: Shareholders have the first opportunity to
purchase new shares issued by the company.
● Right to Sue: Shareholders can take legal action against the
company or its management if their rights are violated.
Voting Rights
● Shareholders can vote at the
company's annual general meeting
(AGM) or extraordinary general
meeting (EGM).
● Each share carries one vote and
shareholders can vote on important
decisions.
● Voting rights include electing the
board of directors, approving
mergers or acquisitions, and major
corporate decisions.
Dividend Rights

01 Dividend amount is determined by the board

of directors and based on the number of shares
owned.

02 Shareholders have the right to receive

dividends when the company distributes
profits.
 Information Rights
● Shareholders have the right to
access company information such
as financial statements and annual
reports.

● Transparency enables
shareholders to make informed
investment decisions.
 Preemptive Rights

Existing shareholders have This helps prevent dilution New investors cannot buy
the right of first refusal to of their ownership stakes. shares until existing
purchase additional shares. shareholders decline the
offer.
 Inspection Rights

● Shareholders have the right to inspect

company records and books.

● This allows verification of the

company's financial position and
performance.
 Right to Sue

01 This is applicable if their rights have been

violated or if there is evidence of fraudulent or
illegal activities.

02 Shareholders have the right to file a lawsuit

against the company or its management.
Liquidation Rights

● In case of company liquidation or

bankruptcy, shareholders have the right
to receive a portion of remaining assets.
● This is after satisfying the claims of
creditors.
● Liquidation rights protect shareholders'
interests in such situations.
 Protecting Shareholder Rights
Proxy Voting: Shareholders
can vote by proxy if they are
unable to attend shareholder
meetings in person.
05
Shareholder Activism:
Shareholders can actively
engage with the company and
voice their concerns through
various channels.
Corporate Governance:
Strong corporate governance
practices ensure that
01 shareholder rights are
respected and protected.
02 Transparency: Companies
should provide clear and
timely information to
shareholders, allowing them
04 to make informed decisions.
03
Legal Remedies:
Shareholders can seek legal
remedies, such as class-action
lawsuits, to protect their
rights.
 Challenges and Future
Trends

● Shareholder Activism: Increasing shareholder activism is challenging

traditional corporate practices and demanding more accountability.
● Proxy Access: Shareholders are pushing for proxy access, which would
allow them to nominate their own candidates for the board of directors.
● Environmental, Social, and Governance (ESG) Issues: Shareholders are
increasingly concerned about the company's impact on the environment
and society.
● Digital Shareholder Rights: With the rise of digital share ownership, new
challenges and opportunities arise for protecting shareholder rights.
Case Laws
Satyam Computer Services Ltd. Scandal (2015): This case involved a massive corporate fraud at Satyam
Computer Services, one of India's leading IT companies at the time. The company's founder and chairman,
01 Ramalinga Raju, had inflated the company's profits and assets for years. The fraud was exposed in 2009, leading to
a significant decline in the company's share value and severe losses for shareholders. The case raised questions
about the protection of minority shareholders and the need for better corporate governance and accountability.

Tata Sons Ltd. vs. Cyrus Mistry (2016): This high-profile case involved a dispute between Tata Sons and its
02 former chairman, Cyrus Mistry. Mistry, who was also a significant shareholder in Tata Sons, was removed
from his position as chairman. He then challenged his removal, alleging oppression and mismanagement in the
company. The case revolved around the rights of minority shareholders and issues of corporate governance
within the Tata Group.

03 Tata Sons vs. Cyrus Mistry (2019): Although this case's major developments occurred in 2019, it had ongoing
ramifications in 2021. It involved a dispute between Tata Sons and its former chairman, Cyrus Mistry. The case
revolved around issues of corporate governance, oppression of minority shareholders' rights, and removal of a
chairman from the board. The legal battle raised important questions about the rights of minority shareholders
and their protection against potential unfair treatment by the majority shareholders.
 Conclusion

Individual shareholder
rights play a vital role in
01
safeguarding
shareholders' interests. 02 These rights empower
shareholders and provide
them with necessary
protection and influence.
Understanding and 03
exercising these rights is
crucial for shareholders to
make informed decisions.
 Questions
Any questions or clarifications
regarding individual shareholder
rights?
Thank you for your time and attention 🙂