SHAREHOLDERS

Shareholder

Corporate and Business Law

Introduction

One of the sources on which company raises capital is through issuance of shares. Issuance of shares is defined as number of authorized shares that are purchased by the people and hence termed as shareholder of the company no matter they are insider investors or general public. This paper will focus on the explaining the position and interests of those who buy shares in a company i.e. shareholders, beside this the discussion would be on nature of the company's “share capital” and the way shares are issued and transferred.

Discussion

Shareholders are the owner of the company as they have purchase a partial portion of the company ownership; they are also termed as subscribers or member of the company. The director of the company is appointed through shareholders of the company and this director run the business on behalf of them (Adams, Pitmans, 2010, pp. 57).

What does it mean to be a shareholder? What Interest?

There are certain interests of those who buy shares in a company. The main interest of shareholder which they look for in a company is returns and company performance. Dividend is a kind of profit which company decides to allocate to their owners. This is a return which they get for the amount they have invested in the company. The main interest of the shareholder is the return i.e. dividend and for that they invest in that company who is performing better in the industry. This decision of dividend is made in the General meeting with number of legal requirements. These requirements are that before distribution of the profit, this profit will be used in paying off the debt or in will be invested in certain profitable projects. After paying all obligation and project investment, the amount left will be distributed to the shareholders. Moreover, share holders also equated with the company's share price as this would leads to the higher sales and results in dividends payment. The following are the main reasons and interest for which people purchase shares (Finch, 2010, pp. 171).

Firstly due to the fact that shares bring the best returns. In the long term shares are among the most profitable investments with great chances of a high return for the investor. Although the rates may fluctuate, however, if people have enough time and patience, this results in as a winner from the trading floor. Secondly, in order to remain financially flexible, investors remain financially flexible as they sell off their shares at any time. If they suddenly need money, they sell their shares papers and immediately have cash (Horcher K., 2005, pp. 121).

Moreover, other interest is that it brings Shares Dividend. Dividends are paid once a year as a shareholder dividend as they have participated in the success of the company. Dividends are a portion of profit and thus a kind of return on capital employed. Dividends thus bring additional return, sometimes even more than invested money in a savings ...