Unequal rights of shareholders

Shareholders only have rights but no liabilities.

What rights do shareholders have?

  • right to vote
  • right to attend AGM and EGM
  • right to receive the Annual Accounts
  • right to receive dividends when declared

Issue – Do some shareholders have more rights than stated above? Do the above always hold true for every single shareholder?

The simple answer – Some shareholders do have more rights, whether rightfully or otherwise, than the others.

The following are real examples where my simple answer holds true:-

  • The issue of consolidating the accounts of 2 companies which are publicly listed. The holding company requires a lot more than statutory info to prepare its consolidated accounts and satisfy its auditors. So we have possible situation of a majority shareholder being given access to non-publicly available info.
  • How about the situation of a major shareholder getting sensitive info through its nominee directors in the subsidiary company? A nominee director is appointed by a major shareholder. Who do that director owe a duty and responsibility to? The major shareholder or to the company?

How to resolve this?

One Comment

  1. definitely.a shareholder with 49% voting shares compared to one owning 51%. although the rights (i.e. formal/legal rights) remain the same, undeniably the one with dominating control in a vote by polling will have more power, i.e. informal rights.


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