The rights of stakeholders in a company

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Freshman (College 1st year) ・Business ・APA ・1 Sources

A particular group of investors known as common stakeholders, own the fundamental security aspect of a company. Although, these common stakeholders own a little percentage of stock with access to the last portion of dividends, they have several rights in the company including; access to a portion of the company’s assets, transferring ownership right to others, vote count in making the big organization decisions, reinvesting in any additional stocks, breakdown of payments and reviewing the company’s financial records whenever they want. They can review company’s financial records on will. They can also sue the company in class actions lawsuit. Common stakeholders have the rights to vote for the passing of major issues in the company and own part of the company’s assets. They can also transfer their ownership rights to others (Bodie, 2013). They are also entitled to intervals of payments that thy can reinvest in more stock or receive it as dividents

Conclusion

In conclusion, it can be said that even if this category of stake holders has the least power to influence company policy, they are afforded certain basic rights due to their input in sustaining the company through their financial investment in stock.

Question b: the rights of preferred stake holders

Introduction

Preferred stakeholders refer to investors in a company who have more claim on the assets of the company than common stakeholders. Although their remuneration is prioritized, they do not vote on company decisions.

Their rights include provisions like being preferred during award of dividends and during liquidation of companies over common stakeholders. They also can convert their investment to common stock at will(Bodie, 2013). However, even though they can’t vote, they can block major decisions made by the company board. They can also appoint individuals to the board and demand that the company offer share acquisition to the public. If the founders of a company sell it, they can proportionately sell their stock too.

Conclusion

To conclude, one can assert that preferred stock presents holders with more financial rights than common stakeholders’. This is because even if they do not have the right to vote, they can impose their power by blocking issues passed by common stakeholders.

References

Bodie, Z. (2013). Investments. New York: McGraw-Hill.

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