A Company is Not the Property of Its Shareholders

A Company is Not the Property of Its Shareholders

Length: 1393 words (4 double-spaced pages)

Rating: Excellent

Open Document

Essay Preview

More ↓
A Company is Not the Property of Its Shareholders


In this report I am going to discuss one new concept of Company which is whether a company is the property of its shareholders or not. Shareholders of a company have their specific rights which are ensured by law . First I will explain about what shareholders of a company are able to do and than about the ethics and social responsibility of the company which will help to come up with a decision for this argument.

History discovers that although some forms of companies are thought to have existed during Ancient Rome and Ancient Greece, the closest recognizable ancestors of the modern company did not appear until the second millennium. Early companies were purely economic ventures; it was only belatedly realized that an incidental benefit of holding joint stock was that the company's stock could not be seized for the debts of any individual member .

Previously company was thought as the property of its shareholders but now according to the new socio-economic thinking, is a social institute which has responsibilities towards society, not only it has responsibilities towards the workers but also towards the consumers and other members of the community .

Lord Justice Lindley defines a company as follows: By a company is meant an association of many persons who contribute money or money’s worth to a common stock and employ it for a common purpose .

Companies are distinguished for legal and regulatory purposes between public companies and private companies . And public companies may be classified into three types; a) companies limited by shares, b) companies limited by guarantee and c) unlimited companies. There cannot be a private company with unlimited liability.

A shareholder (or stockholder) is an individual or company (including a corporation) that legally owns one or more shares of stock in a joint stock company. Companies listed at the stock market are expected to strive to enhance shareholder value .

Shareholders have right to vote (usually one vote per share owned) on matter such as election of Directors , Fundamental Transactions , Proxy Rules etc.; sell their share at any times to generate profit as well as the right to share in distributions of the company's income, the right to purchase new shares issued by the company, and the right to a company's assets during a liquidation of the company .

How to Cite this Page

MLA Citation:
"A Company is Not the Property of Its Shareholders." 123HelpMe.com. 05 Dec 2019

Need Writing Help?

Get feedback on grammar, clarity, concision and logic instantly.

Check your paper »

Ethical Considerations in Marketing, Product Safety, and Intellectual Property

- Ethical Considerations in Marketing, Product Safety, and Intellectual Property I will discuss three to five (3-5) ethical issues relating to marketing and advertising, intellectual property, and regulation of product .I will Argue for or against Direct-to-Consumer (DTC) marketing by drug companies Determine who regulates compounding pharmacies under the current regulatory scheme, what the Food and Drug Administration (FDA) could / should have done in this scenario, and whether the FDA should be granted more power over compounding pharmacies.Decide whether PharmaCARE’s use of Colberian intellectual property would be ethical in accordance with:den Utilitarianism,Deontology,Virtue ethics,Eth...   [tags: FDA, Intellectual Property]

Research Papers
2177 words (6.2 pages)

Essay on Business: Profit Distribution Among Shareholders

- ... Essentials of a sound dividend policy: Sound dividend policy is a long-term policy that aims in maximization of shareholders’ wealth. While determining such a policy investment opportunities of the firm, its present economic status and investors preference should be given due weightage. Generally a wide-ranging dividend policy comprises the following elements: 1. Distribution of dividend in cash: A dividend policy is good only when dividends are paid in cash. Dividend paid in property, scrip or bond is not considered good....   [tags: sound dividend policy, financial manager]

Research Papers
1257 words (3.6 pages)

Essay on management Discussion and Analysis for Rainbow Paint Company

- ... This shall be the new line of paint specially made for the newlyweds. This will be announced as environment friendly, easily removable paints which can be used by the newlyweds to decorate their room in different themes. This is anticipated to raise the revenue of the business by 0.3 times. Rainbow Paint Co. Comparative Balance Sheet December 31, 2011 and 2012 Assets 2011 2012 Current assets: Cash $ 175,000 $ 125,000 Marketable securities 150,000 50,000 Accounts receivable (net) 425,000 325,000 Inventories 720,000 480,000 Prepaid expenses 30,000 20,000 Total current assets $ 1,500,000 $ 1,000,000 Long-term investments 250,000...   [tags: finncial, facts, shareholders]

Research Papers
1234 words (3.5 pages)

The Is A Solar Panel Manufacturing Company Essay

- Solyndra Solyndra is a solar panel manufacturing company that was supported by the Obama Administration that ultimately failed to deliver what they promised “Solyndra 's federally funded venture--with a price tag of $527 million, or about $1.68 for every man, woman and child in America--was supposed to be the litmus test of the Administration 's ability to fund "good projects quickly," according to a 2009 Energy Department e-mail” (Scherer, 2011). What made Solyndra’s technology better than all other solar panel manufacturers is they were manufacturing panels without silicon which is what makes solar panels so expensive....   [tags: Debt, Credit, Limited liability company, Ethics]

Research Papers
1674 words (4.8 pages)

Working at Camden Property And Trust and GameStop Essay

- Introduction In this article I would try to compare both Camden – one of the best companies to work for in the United States according to FORTUNE® Magazine – and Game Stop – according to Forbes Magazine is one of the worst companies to work for in the U.S. Camden Property Trust is a publicly traded multifamily company. Camden primarily owns, develops, acquires and manages multifamily apartment communities. As of 2011, Camden operates 197 properties consisting of approximately 67,452 apartment homes throughout the United States....   [tags: Labor Relations]

Research Papers
2035 words (5.8 pages)

The Distinction Between an Unfair Prejudice Petition and a Statutory Derivative Action

- The unfair prejudice petition has always been regarded as the easier and more flexible option for minority shareholders’ protection compared to the statutory derivative action. The restrictive leave requirements under the statutory derivative claim where the concept of prima facie, good faith and ratification have been interpreted within the confines of the origins in the case of Foss v Harbottle do not add any appeal the statutory derivative claim. Further, the approach in relation to granting indemnity costs orders which is rather limited does not in any way encourage any potential claimant to pursue a derivative action....   [tags: court, jurisdiction, shareholders]

Research Papers
1316 words (3.8 pages)

Financial Statements Are Key Elements For Potential Investors And Existing Shareholders When Making Decisions About Investing Or Lending

- Financial statements are key elements for potential investors and existing shareholders when making decisions about investing or lending to a company. EM is used to improve the appearance of financial statements to attract investors and retain incumbent shareholders. According to Ziv (1998), it is used to smooth out income, which helps companies to reduce excessive fluctuations in their profits leading to continuous growth of their stock. Companies with smooth earnings growth are rewarded with a high share price, thereby boosting the confidence of investors in the long term....   [tags: Generally Accepted Accounting Principles]

Research Papers
2002 words (5.7 pages)

Essay on The Advantages of Changing a Business Into a Company

- The Advantages of Changing a Business Into a Company James wants to change his business into a company; James will receive many benefits if he chooses to take this option. I am going to talk about the main advantages of changing his business into a company which includes the limited liability that James will be entitled to. A company is a business organisation that is registered under the Companies Act 1965[1], this legislation means that the organisation created is subject to different rules....   [tags: Papers]

Research Papers
2453 words (7 pages)

The Philippine Real Estate Market Essay example

- As you will remember the political reforms of President Aquino’s “slowly but surely” and the “ daan na matuwid” statement has begun to bear fruit. The World Bank stated recently that Philippines economic growth showed a great aptitude. And it now started to have more individuals that have begun to risen their confidence in the economic market. Philippines is possibly be called as the “rising tiger of Asia” and possibly be dismiss as the “sick man of Asia”. The Philippine Real Estate market in totality moves up, so there’s still no signs of asset price bubbles in the property market....   [tags: Property, Foreign Investors]

Research Papers
614 words (1.8 pages)

Corporate Social Responsibility of Leading Property Companies in Hong Kong

- Leading Property Companies in Hong Kong, such as San Hung Kai Properties and Henderson Land Development Company Ltd are one of the sectors that are most influenced and profitable in this city. Holding a majority of lands, buildings and much capital, these firms have been a major concern of the public in regard of their influence on the society. In this essay, different views on the corporate social responsibility (CSR) are examined and justified using the shareholders theory and stakeholders theory of CSR....   [tags: San Hung Kai Properties, Henderson Land]

Research Papers
1616 words (4.6 pages)

But ownership of 51% of shares does result in 51% ownership of a company, it does not give the shareholder the right to use a company's building, equipment, materials, or other property. This is because the company is considered a legal person, thus it owns all its assets itself . Because here also comes the responsibility towards the society and business ethics and it will be discuss in the next part.

The conventional companies and company laws take individual principals (shareholders) as the starting point for consideration, believing that the highest or the sole objective of a company is to achieve profits in order to maximize the profits for shareholders. And each share represents a portion of the company's net assets that the shareholder owns . Thus, under this view, only those activities that increase profitability and shareholder value should be encouraged.

Other theorists contend that a business has moral duties that extend well beyond serving the interests of its owners or stockholders, and that these duties consist of more than simply obeying the law. They believe a business has moral responsibilities to so-called stakeholders, people who have an interest in the conduct of the business, which might include employees, customers, vendors, the local community, or even society as a whole .

At the same time, Shareholders do not make informative decisions. For example, say Dell had a shareholder meeting, when you are there, you might be ask to vote on something but honestly, you have no clue of the details. You end up voting based on what the executives tell you. The executives hold all the cards, not the shareholders .

So we can say, in addition to realizing the maximum profits for shareholders, companies should also strive to maintain and upgrade social benefits. Of the two corporate objectives of achieving maximum corporate profits and social benefits, any single one of the objectives will have to be put under restriction by the other. This CSR theory believes that companies have the obligation to satisfying shareholders’ interests rather than causing damages to other parties. By this theory, as long as companies have avoided causing or corrected the social harm caused due to their behavior during the process of business activities, the companies are deemed to have fulfilled their social responsibilities .

A shareholder is investing his money to a company to earn profit from it, so he has every right maximize profit. But now the idea has been changed as you can do whatever you want you can do with your money as you are the owner of your company but it is also true that you have responsibilities to the society and other who are involve to it.
But the question here is how far you can go to maximize your profit and the answer is unless you are not you doing any harm to the society you can do whatever you want to do. The idea of harm varies from place to place and time to time as well. For example, producing wine is harmful in a country like but not in USA and same you prostitution is not recognized to Islamic country.
So you have to balance between your profit maximizing trends as a owner of the company and responsibilities to your society by evaluating the environment of your society.


Article on “Taking Shareholder Rights Seriously”, by Julian Velasco, University of California, Davis [Vol. 41:605]
In England, see Edmunds v Brown Tillard (1668) 1 Lev 237 and Salmon v The Hamborough Co (1671) 1 Ch Cas 204. In England the first joint stock company was the East India Company, which received its charter in 1600. The Dutch East India Company received its charter in 1602, but is generally recognized as the first company in the world to issue joint stock. Not coincidentally, the two companies were competitors.
Commercial Law including company law and industrial law, by Arun Kumar Sen and Jitendra Kumar Mitra, 26th Edition, Page: 542
Commercial Law including company law and industrial law, by Arun Kumar Sen and Jitendra Kumar Mitra, 26th Edition, Page: 538
Commercial Law including company law and industrial law, by Arun Kumar Sen and Jitendra Kumar Mitra, 26th Edition, Page:544-545
Further Reading: Dignam, A and Lowry, J (2006) Company Law, Oxford University Press ISBN-13: 978-0-19-928936-3 and http://en.wikipedia.org/wiki/Shareholder_value; Jones v. H. F. Ahmanson & Co., 1 Cal. 3d) and JONES v. H. F. AHMANSON & CO. (1969) 1 C3d 93
See 2 MODEL BUS. CORP. ACT ANN. § 7.28 historical background n.2,at 7-189 (Supp. 2000-2002) (“following the publication of the Exposure Draft in 1983”); 2 R. FRANKLIN BALOTTI & JESSE A. INKELSTEIN, THE DELAWARE LAW OF CORPORATIONS & BUSINESS ORGANIZATIONS, at VII-28 to -28.1 (3d ed. 2007 Supp.) (noting Chapter 136, laws of 1987).
See, e.g., MODEL BUS. CORP. ACT § 10.03 (charter amendments); id. § 11.04 (2005) (merger). But see id. § 10.20(a) (2005) (noting bylaws may be amended by shareholders acting alone).
See H.R. REP. NO. 73-1383, at 13-14 (1934).
See Whitman, 2004, 5: ...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. Instead, there are both "communities of interest" and "conflicts of interest" between stockholders (principal) and management (agent). This conflict is referred to as the principal/agent problem. It would be naive to think that any management would forgo management compensation, and management entrenchment, just because some of these management privileges might be perceived as giving rise to a conflict of interest with OPMIs.
Essays on Ethics in Business and the Professions, Jack N. Behrman, Englewood Cliffs, NJ: Prentice Hall, 1988
http://en.wikipedia.org/wiki/Stakeholder_%28corporate%29 and Friedman, Milton. "The Social Responsibility of Business is to Increase Its Profits", The New York Times Magazine, September 13, 1970
Zhang Shi Yuan, Liu Li: “On CSR”, excerpt from “Classics of Chinese Commercial Law” (Volume 2002), Press of Machine-building Industry, 2002 edition.
Return to 123HelpMe.com