Shareholder's Rights

Anyone who is a shareholder in a company or business should be aware of the rights that come with their partial ownership of that entity. Depending on the type of stock owned or purchased by an individual, he or she is entitled to certain privileges. As a shareholder, you can make sure that you get the most out of your investment by familiarizing yourself with everything you gain by buying into a company.

What does it mean to be a shareholder?

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Shareholders are people who opt to purchase corporate stock -- partial ownership entitlements -- from a company. If you choose to become a shareholder, then you will pay the cost of a piece of stock times however many of these securities that you choose to buy. With joint-stock companies, three main types of securities exist: common stock, preferred stock, and bonds.

Shareholder's Rights

· Common Stock: The lowest level of securities that one can obtain in a corporation. Owners can vote on corporation decisions and receive dividends, although they are the last priority in dividend distribution.

· Preferred Stock: A higher level of company stock than common stock, and owners are given preferential treatment as such. Preferred stockholders have fixed dividends which are distributed before common stockholders receive their shares of the money.

· Bonds:These securities are in place as a method for the company to borrow money from people. Essentially, they are "debt securities" that are paid back to the seller over time at a set interest rate. Bond owners are not considered to have the same privileges as stockholders, although sometimes corporations will grant them voting rights.

What rights are granted to shareholders?

As mentioned, shareholders are given the right to vote on company actions and are entitled to certain dividends, depending on the type of stock held. Aside from this, they typically are allowed various other rights and privileges as well. Common shareholders are granted the right to variable values of their shares. When a company does well, the value of the stock increases, and common shareholders tend to profit. Common shareholders are also granted the right to freely trade their stocks. They may sue the company if they feel as though it has cheated them through incorrect information provision. Finally, stockholders are allowed the right to browse and examine corporate financial records.

Shareholder's Rights

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For more information on shareholder rights, please take the time to visit http://slaterandkennon.com/

Joseph Devine

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