Introduction
A shareholder or stockholder an individual corporation that legally owns one or more share of the company. Shareholders own the stock, but not the corporation itself (Fama 1980).
Stockholders are granted special privileges depending on the class of stock. These rights are including:
- The right to sell their shares provided there is a buyer.
- The right to vote on the directors nominated by the board.
- The right to nominate directors (although this is very difficult in practice because of minority protections) and propose.
- The right to dividends if they are declared.
- The right to purchase new shares issued by the company.
- The right to what assets remains after.
Stockholders or shareholders are considered by some to be a company stock holder, which may include anyone who has a direct or indirect interest in the company. For example, labor, suppliers, customers, the community, etc. are typically considered stakeholders because they contribute value and/or are impacted by the corporation.
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.
The following sets out a brief summary of the salient provisions of Bangladeshi company law and regulation relating to rights of shareholders of the Company. It is not, and is not intended to be, an exhaustive or definitive lists of such rights but is intended merely to provide brief details and information relating to such rights. The rights of the shareholders (including the holders of AIM Securities) of the Company are included in the Bangladesh Companies Act 1994.
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In Bangladesh Securities and Exchange Ordinance 1969 (together with the Bangladesh Securities and Exchange Commission Act 1993(1) and the rules made ) and the rules of the Dhaka Stock Exchange (DSE) and the Chittagong Stock Exchange (CSE); and the Company’s Articles of Association. Resolutions to be proposed at shareholders’ meetings are classed as either ordinary (requiring a bare majority in number of shares held by persons who attend and vote at the meeting), or special (both requiring a 75 per cent. majority in number of shares held by persons who attend and vote at the meeting). Bangladesh Companies Act In 1994 requires at least 14 days’ notice to be given to shareholders to call an Annual (or Ordinary) General Meeting (or 21 days if special or extraordinary resolutions are to be proposed at such meeting) and 21 days’ notice for an Extraordinary General Meeting.
An Annual General Meeting of the company must be held once per calendar year and no more than fifteen months after the previous Annual General Meeting. Shareholders should be sent the audited accounts of the company together with directors’ and auditors’ reports thereon, proposed to be laid before such Annual General Meeting together with the notice convening such meeting. Further, the Annual General Meeting of a listed company for a year is required to be held within six months of the company’s year end.
In UK, the holders of not less than one tenth of the issued share capital of a company have the ability to requisition an extraordinary general meeting. A shareholder has the right to receive notice of a shareholders’ meeting, attend such a meeting and raise an issue related to the businesses conducted at any such meeting.
1. In 1993 act for corporate to providing share.
The Result of meeting
For a Shareholders’ meeting in Bangladesh members of five persons entitled to vote and present in person. A proxy representing a Shareholder which is a company may not vote unless his appointment as proxy has been approved by a resolution of the directors of the appointing company, which resolution remains in full force and effect at the time of the meeting.
Financial Disclosures
Under the Bangladesh Securities and Exchange Rules 1987, (1) Bangladeshi listed companies are obliged to prepare annual audited accounts, audited by a chartered accountant, and to send such accounts to the Bangladesh SEC, the relevant stock exchanges and all shareholders of such company at least fourteen days prior to holding of its AGM. These financial statements, in addition to the requirements of the Securities and Exchange Rules, 1987 (2) and the Bangladesh Companies Act 1994 (3), are required to comply with the International Accounting Standards as adopted by the Institute of the Chartered Accountants of Bangladesh. In auditing these financial statements, the auditors are also required to conduct their audit in conformity with the International Standards of Auditing as adopted by the Institute of the Chartered Accountants of Bangladesh.
Besides the Bangladesh Securities and Exchange Rules 1987 (4) require Bangladeshi listed companies to prepare half-yearly accounts, which do not have to be audited, but do have to be sent to the Bangladesh SEC, the relevant stock exchanges and all shareholders of such company. The half-yearly accounts must contain a balance sheet, profit and nonprofit account and cash-flow statements prepared in the same way as the annual audited accounts are prepared, and must be sent within one month of the half-year end. A listed company is subject to continuing disclosure requirements investor to the Listing Regulations of the DSE and the CSE. Accordingly, a listed company is required to inform the Bangladesh SEC, the DSE and the CSE immediately of any ”price sensitive information.’’
1. Bangladesh Securities and Exchange Rules 1987 describe obliged to prepare annual audited.
2. Addition to the requirements of the Securities and Exchange Rules, 1987
3. The Bangladesh Companies Act 1994 with the International Accounting Standards as adopted by the Institute of the Chartered Accountants of Bangladesh.
4. Bangladesh Securities and Exchange Rules require Bangladeshi listed companies to prepare half-yearly accounts.
Every transfer of share by the company’s sponsors within 7 days of transfers. Minority shareholders who feel that the Company’s affairs are being conducted in a manner prejudicial to their interests may apply to court for relief in a procedure analogous to that contained in the UK Companies Act 1985. (1)
Enquiries into the Company
The share holders of not less than 5 per cent of the issued share capital of a Bangladeshi listed company can petition to the Bangladesh SEC to make enquirers into the affairs of the company in which they hold shares, or its business and transactions, under the Bangladesh Securities and Exchange Ordinance 1969 (2). If the Bangladesh SEC decides to investigate, it has the power to require the production of information from the company and its directors, officers and employees and that related employees.
Dividends
Bangladesh Securities and Exchange Ordinance,1969 (3) and the rules of the DSE and the CSE, when a final dividend is approved by the directors of a Bangladeshi listed company, the DSE, the CSE and the Bangladesh SEC require that decision to be notified to them within 30 (thirty) minutes. The decision will be subject to shareholders’ approval in the Annual General Meeting if the dividend is a final dividend. The dividends must be disbursed to the shareholders with 60 days of such declaration.
Issue of Shares
The Bangladesh Companies Act, 1994 (4) also gives shareholders pre-emption rights, which may be disciplined by a resolution of the Directors. However, the Articles of Association of the Company provide that, subject to a Shareholders’ resolution to the contrary, any new shares to be issued must first be issued to the existing Shareholders pro rata to their holdings.
Issue of Redeemable Share
In Bangladesh many of company may issue and redeem redeemable shares with shareholders’ approval in a meeting.
1. Companies Act 1985 for relief in a procedure analogous.
2. under the Bangladesh Securities and Exchange Ordinance 1969
3. Bangladesh Securities and Exchange Ordinance 1969 final dividend is approved by the directors of a Bangladeshi listed company
Reduction of Share Capital
A Bangladeshi company may by special resolution reduce its share capital in any manner subject to Court confirmation in a procedure analogous to that contained in the UK Companies Act 1985.(5)
Share Buy Back
In Bangladeshi company may buy back its own shares only by way of a court-approved reduction of capital.
Financial Assistance to Shareholders for Acquisition of Shares
Subject to certain limited exceptions, the Company, being a public company, must not give financial assistance to any person for the purposes of the acquisition of any shares in the Company.
Determination Shareholders’ Interests in Shares
As in the UK, the register of members is definitive for determining the members of the Company.
Removal of Directors
The shareholders of a company may, by extraordinary resolution in a general meeting, remove any director and appoint a director to fill that vacancy.
Loans to Directors
Company is not permitted to make any loans to directors or any person connected with a director, unless the loan is for less than 50 per cent. The value of the shares in the Company held by the director; is approved by the Company in a general meeting; is approved by the directors; and is specifically referred to in the annual report and accounts of the Company.
1. Companies Act, 1985 subject to Court confirmation in a procedure analogous.
2. Business and transactions, Bangladesh Securities and Exchange Ordinance 1969.
3. Bangladesh Securities and Exchange Ordinance, 1969, final dividend is approved by the directors of a Bangladeshi listed company.
Sale of Undertaking or Assets
There is no equivalent to the UK Companies Act 1985 provisions requiring the shareholders to sanction the acquisition or sale of a non-cash asset between a director and the Company.
Under the Bangladesh Companies Act 1994 (7), the directors may not sell the undertaking of the Company without the consent of the shareholders in a general meeting.
As a result in Bangladesh portfolio, the rules of the DSE and CSE require changes in ”substantial shareholdings” to be disclosed to the DSE and or the CSE, as applicable, by the Company. Whilst ”substantial shareholding” is not defined and there is no case law on the point, local market practice would suggest that shareholdings of 10 per cent. And above, and changes to such shareholdings, also need to be disclosed to the DSE and or the CSE, by the Company.
Bangladeshi law does not have an equivalent provision to the mandatory transfer provisions contained in section 429 of the UK Companies Act, 1985(1) which enable an offer or who has acquired 90 per cent. On the other hand the shares in a company to compulsorily acquire the outstanding minority. However, the Bangladesh Companies Act, 1994(2) does contain provisions for a court to sanction a scheme of arrangement (similar to the provisions in section 425 of the UK Companies Act 1985 (3) and, subject to such court approval, for the mandatory transfer of shares pursuant to a scheme if the scheme is allowed by not less than three quarters of the shareholders, within 120 days of the offer to acquire the entire issued share capital of a company.
In general the issued share capitals of Bangladeshi listed companies are not permitted to enter into derivatives contracts referenced to their shares under which they short sell such shares.
1. In section 429 of the UK Companies Act, 1985 an equivalent provision to the mandatory transfer provisions contained.
The High Court Division was of the opinion that words of section 233(1) to consider in the context of the case were,” affairs of the company” and “powers of the directors”. The High Court Division considered the provision of section 233 of the Company Act, section 459 of the English provision based upon “unfairly prejudicial” of the conduct. Mrs. Justice Arden delivered the judgment that case analyzed the guidelines set out in the case by Neil LJ in Re Saul D Harrison & Sons PLC (1995) 1 BCLC 492 guidelines include :
Ø The words “unfairly prejudicial” are general words and they should be used flexibly to meet the circumstances of the particular case.
Ø The section giving relief should not be allowed to become an instrument of oppression not to stifle managerial decisions.
Ø The relevant conduct of commission and omission must relate to the affairs of the company of which the petitioner is a member.
Ø Prejudicial conduct means causing prejudice or harm to the relevant interest.
Ø Unfairness can arise out of a breach of the petitioner’s legal rights, for example the memorandum and articles of association or arising out of the fiduciary duties of directors, or the petitioner’s legitimate expectations.
Ø Serious mismanagement of a company business can constitute unfairly prejudicial conduct.
Ø Directors exceeding their powers or exercising them for some illegitimate or ulterior purpose would allow a shareholder to complain.
Under the Australian legislation, section 260 provides a remedy against any person involved in the affairs of the company. This includes the directors, majority shareholders, substantial shareholders as well as the company itself.
The promotion, formation, membership, control, business, trading, transaction, and dealings, property, liabilities, profits and the income, receipts, losses, outgoing and expenditure, the internal management and proceedings; and the power of persons to exercise, or to control the exercise of, the right to vote attached to shares in the body corporate or to dispose of, or to exercise control over the disposal of, such shares. The High Court Division was of the opinion that as the Bangladeshi statue contains similar words, the situations encompassed in the Australian section 53 will also be encompassed in Bangladesh section 233.
1. Section 233 to consider in the context affairs of the company and powers of the directors.
2. In section 260 provides majority shareholders, substantial shareholders as well as the company.
Shareholder Rights, Actions, and Liabilities
The rights afforded to shareholders are contained in each corporation’s articles of incorporation or bylaws. It is also not only worthy that do shareholders generally not have the right to vote on management issues that occur in the ordinary course of the corporation’s business. Many decisions of the corporation must be made by the board of directors or officers of the corporation, and in most cases, shareholders may not compel the board or officers to take or refrain from taking any action. In general Our Stock Bangladesh tool lets you create the web’s best looking financial charts for technical analysis. Our Scan Engine shows you the Bangladesh share market’s best investing opportunities.
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Share is the owner ship of a company. Share represents a claim on the company’s assets and earnings. As you acquire more shares, your ownership stake in the company becomes greater. Whether you say share, equity or stock, it all means the same thing.
Why does a company issue share
A company could keep the profits and earnings for the owners of the company. In order to extend market share or get bigger asset, at some point every company needs to raise money. To do this reason, company can either borrow it from somebody or raise it by selling part of the company, which is known as issuing share. The first sale of share by a company is known the Initial Public Offering (IPO).
Risk involvement in share
This is a very important factor every one believe in risk when parson want to invest in share market. There is no guarantee of what percentage of capital you will gain, where and when the share price stops in up-end or low end and how long it takes to get the profit. It is true, no company or institute can guarantee. However, you can measure the risks in various ways. That is why it is essential to do some on a company before you invest. The Home Work should be calculating earnings per share (EPS), total debt, relative price strength, profit margins, volume, and industry leader and so on. You can also reduce the risk by diversifying the portfolios and measuring the correlation between a share and market index. A less risk taker has options to invest in Bond 9fixed returns) or a company that provides dividends at the end of the year. However, investors need to measure “expected rate of returns” first and it should be high enough to compensate the investors for the perceived risk of the investments. Risk is contrary to the positive profit, but there is also bright side. Taking a greater risk demands a greater return on the investments.
The rights of shareholders in a company
Common Shareholders’ Six Main Rights
1. Voting Power on Major Issues
2. Ownership in a Portion of the Company
3. The Right to Transfer Ownership
4. An Entitlement to Dividends
5. Opportunity to Inspect Corporate Books and Records
6. The Right to Sue for Wrongful Acts.
Majority shareholders often wish to act in ways that may disadvantage the minority. For example, it may be in the majority’s interest to obtain complete control of a company by acquiring the minority’s shares. Alternatively, the majority may want to increase their control without expropriating the minority’s shares. The majority may wish that to exclude the minority from participation in future rights issues. In these kinds of situations, however, there is likely to be considerable uncertainty as to the risks that the exercise of the majority’s power will be open to challenge by the minority. By providing distinct practical advice this book will assist majority shareholders in exercising their power, to enable them to avoid successful challenges brought by disgruntled minorities. This book considers, firstly, different ways in which majority shareholders may exercise their power to expropriate shares from minority shareholders. It then analyses each of these methods and suggests ways of reducing the risks that such actions of these methods may be challenged by disaffected minorities. Methods of expropriation included in this section include: the introduction of expropriation provisions into a company’s articles of association; schemes of arrangement under s 425; and compulsory acquisition of shares under as 428-430 (1). Further, the authors consider ways in which majority shareholders may control minority shareholders without expropriating shares from them. Topics in this section include the majority’s power to vary rights attached to the minority’s shares and to exclude the minority from participation in rights issues. Finally, the book discusses a variety of other topical issues that are relevant to majority control, for example, the extent of the majority’s power to ratify wrongs they have committed against the company and the majority’s power to limit dissent at company meetings.
To majority shareholders on ways of minimizing the risk that their actions are being challenged are:
Ø Expropriation of minorities.
Ø Statutory Squeeze-outs.
Ø Schemes of Arrangement.
Ø Asset sales.
Ø Dilution through capital issues.
Ø Authorization and ratification
Ø Responding to unfair prejudice proceedings.
1. Compulsory acquisition of shares under section 428-430 act.
There are some of the principal for share holders to maintain the rules of organization, when any one to buy their share.
Principle 1: Overall Growth is not nearly as important as Growth per Share
To often people hear leading financial publications and broadcasts talking about the overall growth rate of a company. While this number is very important in the long run, it is not the all-important factor in deciding how fast your equity in the company will grow. Growth on the diluted earnings per share.
Principle 2: When a company reduces the amount of shares outstanding, each of your shares becomes more valuable and represents a greater percentage of equity in the business.
If a shareholder-friendly management such as this one is kept in place, it is possible that someday there may only be 5 shares of the company, each worth one million dollars.
Principle 3: Stock Buybacks are not good if the company pays too much for its own stock.
Even though stock buybacks and share repurchases can be huge sources of long-term profit for investors, they are actually harmful if a company pays more for its stock than it is worth or uses money it cannot afford to spend. However overpriced market, it would be foolish for management to purchase equity at all, even in itself. Instead, the company should put the money into assets that can be easily converted back into cash. This way, when the market moves the other way and is trading below its true value, shares of the company can be bought back up at a discount, giving shareholders maximum benefit.
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