In almost all the countries in the world, company managers and boards of directors have a fiduciary responsibility to carry on the company in the interests of its stockholders.
Martin Whitman argued that- …it can safely be stated that there does not exist any publicly traded company where management works exclusively in the best interests of OPMI [Outside Passive Minority Investor] stockholders.
Shareholders in the primary market who buy IPOs provide capital to corporations; however, the vast majorities of shareholders are in the secondary market and provide no capital directly to the corporation.
Therefore, contrary to popular opinion, shareholders of American public corporations are NOT the (1) owners of the corporation, (2) the claimants of the profit, or (3) investors, as in the contributors of capital.
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This is not an example of the work produced by our Law Essay Writing Service.Depending on the class of stock stockholders are granted special rights.They are- If a company goes insolvent and has failure to pay the loans the shareholders are not legally responsible to pay that.Preferred stock – owners of preferred stock have first claim to a company’s profits and assets. Redeemable stock allows a company to repurchase it at some point, whereas convertible stock enables stockholders to exchange preferred stock for common stock.Shareholders are generally classified as individual investors or institutional investors.“A proper balance of the rights of majority and minority shareholders essential for the smooth functioning of the company”-explains & illustrate.” A share holder can be defined as an individual or company (including a corporation) who legally owns one or more shares of stock in a joint stock company.Both private and public limited companies have shareholders. A shareholder or stockholder is an individual or institution (including a corporation) that legally owns one or more shares of stock in a public or private corporation.In real life, actually contested board elections are hard to find.Board candidates are generally chosen by insiders or by the board of the directors themselves.Such as, labor, suppliers, customers, the community, etc.they are usually considered stakeholders due to contribution of value and are affected by the corporation.