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 The dividend to be paid is required to be

approved by the shareholders of the company


at the annual general meeting of the
company. Shareholders have the right to
receive the dividend within 30 days of
declaration.
Shareholders play an important role in the appointment of
directors. An ordinary resolution is required to be passed by the
shareholders for the appointment. Apart from this, shareholders
can also appoint various types of directors. They are:
 An additional director who will hold the office until the next
general body meeting;
 An alternate director who will act as an alternate director for a
period of 3 months;
 A nominee director;
 Director appointed in the case of a casual vacancy in the office of
any director appointed in a general meeting in a public company.

Apart from this shareholder also can challenge any resolution


passed for the appointment of a director in the general body
meeting.
Shareholders also can bring legal action against
director by the rules laid down in the Companies Act
2013.
They are:
 Any act done by the director in any manner which is
prejudicial against the affairs of the company.
 Any act done which is beyond the law or against the
constitution.
 Fraud.
 When the assets of the company are being
transferred at an undervalued rate.
 When there is a diversion of funds of the company.
 Any act done in a mala fide manner.
 Shareholders also have a right to appoint the
company auditors. Under Companies Act 2013,
the first auditor of the company is to be
appointed by the board of directors. Further the
shareholders at the annual general body meeting
at the recommendation of directors and audit
committee. The appointment is generally done
for five years and further can be ratified by
passing a resolution in the annual general body
meeting.
Shareholders also have the right to attend and vote
at the annual general body meeting.
When a resolution is brought by members of a
company then according to companies act 2013 it
can be passed only by the means of voting by the
shareholders. Companies Act 2013 recognizes
following types of voting:
 Voting by the showing of hands
 Voting done by polling
 Voting done by electronic means
 Voting by means of postal ballot

A shareholder also has a right to appoint proxy on


his behalf when he is unable to attend the meeting.
 Shareholders have the right to call a general
meeting. They have a right to direct the
director of a company to can all extraordinary
general meeting. They also can approach the
Company Law Board for the conduction of
general body meeting, if it is not done
according to the statutory requirements.
 As shareholders are the main stakeholders in
a company, they have the right to inspect the
accounts register and also the books of the
firm and can ask questions about the same if
they feel so.
 Shareholders have the right to get copies of
financial statements. It is the duty of the
company to send the financial statements of
the company to all its shareholders either in a
quarterly or annual statement.
 Before the company is wound up the
company has to inform all the shareholders
about the same and also all the credit has to
be given to all the shareholders.
 When the sale of any material of any company
is done then the shareholders should get the
amount which they are entitled to receive;
 When a company is converted into another
company then it requires prior approval of
shareholders. Also, all the appointment has
to be done according to all the procedures
and also auditors and directors have to be
done;
 Right to approach the court in case of
insolvency.
They have right:
 To receive share certificate (in case shares are
held in physical form).
 to transfer shares
 To receive right offer of shares(in case of
public company).
 To receive bonus shares.
Some notable provisions for protecting minority
shareholders interest:
 Majority shareholders who by virtue of
amalgamation,share exchange conversion or any
other reason have come to hold 90% or more of
the equity share capital have been mandated to
make an offer to minority shareholders for buying
their equity shares. The price for the shares will be
determined by a registered valuer.
 Members holding shares of nominal value not
exceeding INR 20,000 shall be entitled to
collectively nominate one director on the board of
a listed company
Availability of complete and correct
information is required for developing an
investor protection system. But the
disclosures required under the Securities
Contracts (Regulation) Act, 1956, leave а
lot of loopholes regarding the disclosures
to be made in the prospectus. Therefore,
some companies give false or misleading
statements in their prospectus so as to
attract and cheat innocent investors.
Insider trading means sale or purchase of
securities by persons who possess price
sensitive information about the company
on account of their fiduciary capacity. For
instance, information about the
declaration of high rate of dividend, issue
of bonus shares, rights shares etc.,
information relating to financial results of
the company, amalgamations, mergers
and takeovers, disposal of the undertaking
and such other information.
Lack of transparency is another
shortcoming of the stock market. The
investor does not know the actual rate of
the transaction. The investor should be
informed about the rate and brokerage by
noting them on the contract.
No legal framework is present but it is incorporated in different
acts such as Companies Act, Securities Contracts (Regulation) Act,
Consumer Protection Act, Depositories Act, and Listing Agreement
of the Stock Exchanges.
Since the shareholders furnish the funds and bear the risk,
they have been given certain rights, both in their individual
capacity and as a group. It is as a group, when attending
general meetings of the company, that shareholders enjoy
the privilege of exercising control over the policy in relation
to the working of the company.
 Against Companies.
 Against Brokers.
 Against depositories
An investor can seek redressal of his grievances
from, the following agencies:
1. Grievance cells in stock exchanges
2. SEBI
3. Company Law Board
4. Courts
5. Press
1. After receiving the complaint from investors, these are
forwarded to the concerned company which is directed
to solve the matter within 15 days, progress is
monitored.
2. If, in spite of reminder, the company fails to resolve
the complaints and the total number of pending
complaints against the company exceeds 25 and if
these complaints are pending for more than 45 days,
the cell issues a show cause notice of 7 days to the
company.
3. If the company still fails to resolve the complaint
within 7 days of issue of show cause notice the scrip of
the company is suspended from trading.
 Complaints arising out of activities that are covered under
SEBI Act, 1992; Securities Contract Regulation Act, 1956;
Depositories Act, 1996 and Rules and Regulations made
thereunder and provisions that are covered under Section
55A of Companies Act, 1956 are handled by SEBI.
 SEBI SEBI has a dedicated department viz., Office of Investor
Assistance and Education (OIAE) to receive investor
grievances and to provide assistance to investors by way of
education.
 Grievances pertaining to stock brokers and depository
participants are taken up with respective stock exchange
and depository for redressal and monitored by SEBI through
periodic reports obtained from them.
 Company law Board which was constituted in May 1991
has been entrusted with many powers which were
previously exercised by high courts. Every bench of
company Law Board is deemed to be a civil court and
every proceeding before it is deemed as judicial
proceeding.
 To protect the interests of investors it has the power of
inspection of records and documents and enforcing
attendance of witnesses.
 Representations about desired changes in the
Companies Act for investors protection can also be
made to the Company Law Board
 When an investor has tried all other ways of getting his
grievance settled there is no other way left with him
except to proceed against the company or the
intermediary by way of civil and criminal proceedings.
 Suits against companies can be filed in the high courts
of the states. Every high court has special designated
benches about company affairs and all complaints
against companies in breach of Companies Act are
heard there.
Good governance requires fair legal
frameworks that are enforced by an
impartial regulatory body for the full
protection of stakeholders.
Good governance means that the processes
implemented by the organization to produce
favourable results meet the needs of its
stakeholders, while making the best use of
resources – human, technological, financial,
natural and environmental – at its disposal.
Accountability is a key tenet of good
governance. Who is accountable for what
should be documented in policy statements.
In general, an organization is accountable to
those who will be affected by its decisions or
actions as well as the applicable rules of law.
Presentation by G-13
Ritik
Ritik Goel
Revant Chaudhary
Ravinder