What does a shareholder do?

1 Shareholder rights

As a shareholder, you have certain rights that can vary depending on the type and class of shares you own. These include the ability to vote on major corporate issues such as electing directors, approving mergers, or changing the company's charter. Additionally, you have the right to receive dividends from the company's profits, inspect the company's books and records, sue the company or its directors for misconduct or fraud, and sell or transfer your shares with any restrictions or limitations imposed by the company or the law.

2 Shareholder responsibilities

As a shareholder, you have certain responsibilities stemming from your ownership interest in the company. These include acting in good faith and in the best interest of the company and its shareholders, particularly if you have a controlling stake. You must also comply with the company's bylaws, policies, and rules, as well as the applicable laws and regulations governing the industry and market. Additionally, it is your responsibility to pay taxes on your income and capital gains from your shares, as well as any fees or charges associated with your share ownership. Furthermore, you must monitor the company's performance, strategy, and governance, exercising your voting rights accordingly. Lastly, you must communicate with the company and other shareholders to voice your opinions, concerns, and feedback.

4 Shareholder benefits

As a shareholder, you can reap a range of benefits depending on the performance and strategy of the company, such as capital appreciation, dividend income, liquidity, diversification, and access to information. Capital appreciation is the increase in the value of your shares over time and reflects the growth and profitability of the company. Dividend income is the periodic distribution of the company's earnings to its shareholders, demonstrating the stability and sustainability of the company. Liquidity is the ease and speed of converting your shares into cash and indicates the demand and supply of the company's shares in the market. Diversification reduces risk by investing in different companies, sectors, or regions, showing the variety and flexibility of the share market. Finally, access to information is the availability and quality of the company's financial and non-financial disclosures which reflects its transparency and accountability.

5 Shareholder risks

As a shareholder, you face a variety of risks depending on the volatility and uncertainty of the company and the market. These risks include capital loss, which occurs when the value of your shares decrease over time, dividend cut, which is when the company reduces or eliminates dividend payments, dilution, which is when the percentage of ownership and voting power decreases due to new shares or other securities being converted into shares, fraud, which is when financial or non-financial information is intentionally manipulated, and market risk, which is exposure to external factors that affect share price and demand.

6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?