Shareholders Rights in Qatar - Coursework Example

Shareholders Rights in Qatar A shareholder is an individual, group or an organization that legally owns a share or stock of a company and a legal document in form of a certificate is issued upon registration. As a shareholder, there are some rights transferred upon registration as a member of a company after acquiring shares. The shareholder has the benefits of receiving dividends depending on the number of shares acquired from a company. These dividends are posted into a shareholders account upon determination by the board of directors (Baydoun, #7). Once an individual becomes a shareholder there are rights that he acquires. These rights are: The right to vote for members of board. This gives a shareholder a chance to vote for the members he believes can bring success to the company as a general. Secondly, a shareholder has the right to place a complaint if the company is poorly managed by the existing board. Also the shareholder has the right to partake in division of significant assets immediately the company is terminated and winding the company if it of any value. These are the general rights applied by all companies that participate in issuing shares to the shareholders. This paper will focus mainly on the rights of shareholders in Qatar and remedies of a shareholder. The type of a right that a shareholder can have is determined by the company. This depends on the class of the share that a shareholder has purchased from a corporation. The right to attend common meeting then vote. In most scenarios every share carries a vote though at times the shares can have multiple vote ability. The shareholders attend a shareholder meeting where the voting can be done in different ways. In a case where the issue at hand is not under lots of opposition, the voting strategy used is the show of one hand. This method is not a proper and a genuine way since the power of a shareholder is demonstrated by the number of shares that a shareholder has within the company (Sharar, # 6). The only way this power can be demonstrated by a shareholder is through voting where poll is done which means that the real numbers of shares of a shareholder are recorded. This scenario is not effective in Qatar especially with the case of minority shareholders. The minority shareholders are denied the chance to actively participate in the voting process putting them in a position of being voiceless in the company affairs (Baydoun, #7). The right to transfer shares: Most of the companies started the business of issuing shares as a method of investment to a shareholder and as a way for the companies to make profit. The shares cannot appear attractive unless they are transferable to other shareholders. The only case that can make the shareholder not to be in apposition to transfer these shares is if the shareholders agreement forbids so. The transfer procedure involves completion of a “stock transfer form” which should be duly stumped. All the necessary payments should be made and the fully filled form sent to the company. The company directors make the resolution on whether to make the transfer though the secretary on behalf of the board can receive the transfer if permitted to do so. If the board disagrees on the transfer, it sends a refusal notice to the transferee within two months of receiving the form of transfer. However, if the company accepts the transfer the necessary entries are made and a share certificate is issued to the transferee within two months of receiving the duly completed form. Right to sue the company in case of illegal management: A shareholder has the right to start a personal action against the board of the directors or the shareholders can begin an action on the behalf of entire company against the managements. This can be on the issue of poor governance by the board and misuse of the minority shareholders. These members of board tend to take advantage over the minority shareholders because they have no voting rights and thus they misuse their funds. The board pay themselves heavily and give themselves allowances that leave the minority shareholders drained. Thus the shareholders can prosecute the board to achieve equality for these minors. This policy of suing the board can be followed according to the remedies drawn by the company constitution for the minority stake holders. Right to a final sharing on a corporation winding up: The winding up of a company means that the company has cleared all the debts of its creditors. In a situation where the company is winding up the shareholders have the right to share the remaining assets of the company based on the ratio of the number of shares that a stock holder has with the corporation. This process involves two comprehensive stages. First, the capital of the company is returned then the rest of the surplus capital is distributed among the shareholders. The management can also set up a method to guide on how the assets can be shared depending on the types of shares that an individual has held with the company. These guidelines are tabled by the management and the roles must be followed as stipulated by the board. Right to share the Corporations profit: As a shareholder certain advantages exist in case a company makes a profit. The profits are shared inform of dividends. These dividends are based on the number of shares that a stockholder has within the company. This gives the shareholder the benefits that at the long run are helpful. When the stakeholder decides to buy shares, he makes an investment and the benefits received are a positive feedback and this increase the confidence because of the credibility of the companies. However, some companies fail to honor this especially with the case of the minority shareholders where the board tends to divert the benefits to themselves (Aldamen, #2). Right to receive the duplicate of the annual company financial records: The shareholder has the right to access the annual financial records of Company in which he or she has registered with. From these accounts the shareholder can make decision regarding the progress of the company. If the company is making profits and the shares are trading positively at the stock exchange, then the shareholder may opt to trade in more shares at the company. If the company is not making progress then the shareholder may take other decisions regarding the ownership of the shares the company. The stakeholder can transfer the shares to another individual or sell them to the company to avoid loss. This creates transparency within the company and the shareholders are able to build confidence with the company enhancing the potential growth of the corporation. In conclusions, there exists lot of oppression especially with the minority shareholders. Minority shareholders are the people in a company who own less than 50% of the total shares of a company. These individuals can undergo lot of suffering and abuse in the presence of the principal majority shareholders. To protect their interest, the minority shareholders have placed s several remedies to help them stand there own ground during hard times with the board and the majority shareholders (Sharar, #6). From the discussed rights there are problems that exist because not all rights are applicable to different types of stockholding. Firstly, the minority shareholders are denied the chance to vote for their executive and the changes they wish to be made on the management of the organization. This makes the management overstep it boundaries and start treating the shareholders in an awkward manner. This reason is facilitated by the fact that the minority shareholders have no say in the way the management runs the company. At this position most of the board members and the majority stakeholders take advantage of this situation because the minority shareholders cannot vote them out (Aldamen, #5). The majority shareholders thus vandalize the company properties because they know their vote is what counts. Also, the minority shareholders have no right in sharing the profits of the company in an equitable manner as the rules holds. The management may choose to make payments of dividends in a certain way that does not favor the minority shareholders. This leaves the management enjoying the big the issues that deal with the minority shareholders (Al-Hemyari, #9). Lastly, the minority shareholders are not given opportunities when it comes to issues of winding up of a business. The assets of a company are shared among the members according to the policies that the board shall set as the guide. These guidelines may fail to favor the minority shareholders thus placing them in a situation of losing always to the management. With all these setbacks the Qatar companies have set up remedies in case of the management fails to honor what the company constitution approves. The minority rights have been revised to protect them from the majority shareholders. If these remedies are followed then the protection of the minority shareholders is guaranteed the repercussion of failure to honor the rules attracts heavy penalty References. Aldamen, H., Duncan, K., Kelly, S., McNamara, R., & Nagel, S. (2012). Audit committee characteristics and firm performance during the global financial crisis. Accounting & Finance, 52, 4, 971-1000. Al-Hemyari, A., Malinauskaite, J., & Brunel University. (2012). Merger and acquisition laws in UK, UAE and Qatar: Transferring rights and obligations. Baydoun, N., Maguire, W., Willett, R., & Ryan, N. (2013). Corporate governance in five Arabian Gulf countries. Managerial Auditing Journal, 28, 1, 7-22. Sharar, Z. (2010). Minority Shareholders Remedies in Public Shareholding Companies: Comparing the State of Qatar and Australia. ePublications@bond. Read More