The Powers and Rights You Have As A Shareholder

An understanding of what your rights are would give you the right perception towards investing as you would begin to think and act like an owner

Investing is more than just setting money asides towards making future financial gains. Inasmuch as you do potentially benefit from buying shares in an organization, you also have to remember that you are also helping the company itself to grow by providing the funds they require to effectively run and increase the value of the company.

By so doing, you are also contributing to the economy of the nation. As such, investing should go beyond collecting dividends. Being a shareholder makes you a part owner of the company and this confers on you certain rights and powers.

An understanding of what your rights are would give you the right perception towards investing as you would begin to think and act like an owner. While many of these rights or powers depend on the weight of shares you have, here are a few of the powers and rights you have as a shareholder of a company.

The Right To Request For Information

As an investor or a shareholder of a company, you automatically are entitled to receive information. You would get business and financial reports on the operations of the business periodically and such reports can be used in your assessment of the company.

However, you are allowed to request for information as well. If one of the companies in your portfolio is embarking on a new project causing a decline in dividend yield, you are required to see what your funds are being used for where you need clarity.

You Can Be A Part Of Corporate Actions In The Company

Corporate actions are actions that change or alter the corporate structure of a company and a good example of this are mergers and acquisitions. A recent one was the one between Access Bank and Diamond Bank.

Because these actions affect you as a shareholder, you can follow through the process by contacting the organization periodically. You goal is to ensure that things work out fine and that you know what difference it poses for you.

For one, how will your shares be diluted? You are allowed to go for the events of the company in relation to such corporate actions. Another example is if there is a major change in management of the company. Where there are decisions to be made on liquidations, you can also be a part of that as well as long as you are qualified to do so.

To Right Vote Up To Your Shares

It is normal to be a passive investor, especially when you have one too many stocks to worry about in your investment portfolio, but thinking like an owner is what spurs you into being a part of the decision making process.

After all, the decisions other shareholders make would affect you as well. With voting, there are certain restrictions and chief of the criteria is that you have up to a certain amount of shares.

It helps to find out if you do. This means that you can be actively involved in appointing or voting out members of the board of directors.

The Power To Remove A Director

As big a deal as this sounds, it is a power you have as an investor. Not only can you vote, you can also decide if the company is better off without a director and choose to remove him or her. How?

You can do so by ordinary resolution together with other shareholders of the company. Your success should not be limited by poor decisions made by the management and you can actually do something about it to protect your own interests.

There are many more rights the investor/ shareholder has. Know them, and use them. It is important to note, however, that the growth of your portfolio should be your priority. Do not compromise on that while chasing shorter term goals or gains.

Written by Lawretta Egba.