Shareholder Rights: A Comprehensive Overview of Equity and Preferred

This essay provides a comprehensive overview of shareholder rights, contrasting the rights of equity shareholders with those of preferred stockholders. It highlights that equity shareholders possess the right to participate in general meetings, vote on key business decisions, and influence management through the election of directors, as well as receive dividends and a share of company assets. Preferred stockholders, on the other hand, have a higher claim on assets and earnings, receiving dividends before equity shareholders but typically lack voting rights. The essay concludes that while preferred shareholders receive dividends first, equity shareholders play a more pivotal role in the business decisions of the organization. Desklib offers a wealth of similar solved assignments and study resources for students.

Table of Contents
INTRODUCTION......................................................................................................................3
Right to the shareholders............................................................................................................3
Right to preferred stocks............................................................................................................3
Conclusion..................................................................................................................................4

INTRODUCTION
With the ramified changes in economy, every organization has been using the equity
share capital as finance source to raise capital from the market. It is analyzed that equity
shareholders are the owners of the company who invest their capital in the business for their
business operation.
Right to the shareholders
Shareholders are the owners of company and entitled to participate in the general
meeting and vote. The most common right of the shareholders are sharing the company’s
profitability, income and assets, degree of control and influence over the company,
management selection, and pre-emptive right and voting rights in the meetings. The
shareholders of the company are also entitled to know all the imperative information about
the business transactions of the company. These investors are also entitled to get the annual
report and financial statement of company which they use to take their imperative financial
decisions. These shareholders are main investors and entitled for the return on equity
shareholding capital invested by them and dividend payment. In addition to this, these
shareholders are also entitled for the key business decisions which company is going to take
for expanding business. For instance, if company wants to enter into the strategic alliance
with other company then it will have to get resolution passed from the shareholders in the
convinced meeting (Bruno, 2015). The shareholders also have right to influence the
management through the election of the company’s board of the directors. In addition to this,
the main right available to shareholders are the pre-emptive right. This right shows the right
to buy issued shares before the public could buy (Camara, 2016).
Right to preferred stocks
The preferred stock is the typical class of shareholders who have higher claim on its
assets and earning than common stocks. These preference shareholders are entitled to have
dividend before the dividend that must be paid out before the dividend to be paid to the
common stakeholders (Bruno, 2015). They have pre-emptive right to the shareholders. These
preferences shareholders are the first class shareholders and have special right towards the
share capital of organization. These shareholders will be given dividend on priority basis

before the dividend given to equity shareholders (Agyemang, Aboagye, & Frimpong, 2015).
The preferred stockholders are the main shareholders who are classified different from those
shareholders are and kept at higher point as compared to equity shareholders (Levis, Meoli, &
Migliorati, 2014).
Conclusion
After analysing the rights of the preferences shareholders and equity shareholders, it
could be inferred that preferences shareholders have right for the dividend to be paid to them
before the same could be paid to equity shareholders. However, they could not participate in
meeting and other programs. On the other hand, equity shareholders have right to participate
in the meeting and vote for particular business decisions. They plays pivotal role in the
business decision of organization.

References
Agyemang, O. S., Aboagye, E., & Frimpong, J. (2015). Left to their fate: rights of minority
equity holders in Ghanaian firms. Society and Business Review, 10(1), 40-66.
Bruno, S. (2015). Legal Rules, Shareholders and Corporate Governance: The European
Shareholder Rights’ Directive and Its Impact on Corporate Governance of Italian
Listed Companies: Australia: The Telecom SPA Case.
Levis, M., Meoli, M., & Migliorati, K. (2014). The rise of UK Seasoned Equity Offerings
(SEOs) fees during the financial crisis: The role of institutional shareholders and
underwriters. Journal of Banking & Finance, 48 (1) 13-28.
Camara, A. (2016). Anonymous Capital: Managing Shareholder Volume for Equity
Crowdfunded Companies in Canada. Banking & Finance Law Review, 31(2), 259.