What are my rights as a shareholder?

On Behalf of | Nov 3, 2020 | Business Litigation |

Many people in the Maumee area hold stock in a variety of publicly traded companies. Stocks can form an important part of a person’s financial portfolio, so it is important as a shareholder to understand what your rights are. Common shareholders have the following six rights.

Voting rights

First is the right to vote on major issues. These includes voting for directors and any changes to the that will fundamentally affect the company, such as a potential merger or bankruptcy.

Ownership rights

Second is ownership rights. When the company is successful, common shareholders can claim a specific portion of the assets owned by the company, and the value of their shares rises. Keep in mind that if the company goes bankrupt, creditors and bondholders will receive their share of the proceeds resulting from liquidation before common shareholders receive anything.

Transfer rights

Third is the right to transfer ownership of their shares in the company. This means that common shareholders can trade their stock in the company on a stock exchange. Quick liquidity is a feature that makes stock ownership different than other types of investments, which can take months to be converted into cash.

Dividend rights

Fourth is the right to dividends. Common shareholders have a claim to any profits the company pays out through dividends, as opposed to reinvesting profits back into the company. While shareholders do not get to decide how much a company should pay out as dividends, when dividends are declared, they are entitled to their portion of those dividends.

The right to examine company documents

Fifth, shareholders have the right to examine company corporate and financial records. These include company bylaws, minutes of board meanings, and per law publicly traded companies must periodically make financial disclosures.

The right to sue

Sixth, shareholders have the right to hold the company liable for wrongful acts. In general, this takes the form of a class-action lawsuit.

Do your research if you think your shareholder rights are violated

Ultimately, if you believe your rights as a shareholder are being violated you will want to seek legal advice. Corporate law and business litigation are complex areas of law. This post does not contain legal advice for any specific situation, so those in Ohio who need more information on business litigation and shareholder rights will want to consult with a professional before proceeding.

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