Know Your Rights As a Shareholder

While you become the shareholder of a company by either buying a bond, common stock or preferred stock, you should be informed of the rights in order to be less susceptible to risks of losing money during difficult market times.

Right to Vote:

Stockholders have right to vote for the leadership team of the company and can also propose fundamental changes that may affect the organization directly like acquisition, mergers and liquidation.

Bankruptcy:

If the company goes bankrupt, bondholders and preferred stockholders enjoy priority in getting a share of the company’s assets.

Liquidation:

In the case of liquidation, preferred stockholders and bondholders are compensated first and then come the common stockholders.

Profit earning:

Stockholders enjoy the potential of profits during the growth of the company.

Dividends:

Preferred stockholders enjoy a guaranteed payment of dividends whereas the common stock holders are not guaranteed the same.

The common stockholders also enjoy the right to trade their shares lives on a stock exchange and move the money around at their free will. This is a thrilling power to enjoy because, if you invest money on real estate, it can take several months to reap the investment into huge profit cash.

The common stockholders also have to right to inspect Corporate Records. This is especially important if you hold shares of the private companies. Public companies are anyway required to be transparent to the share holders with their financial dealings.

The common stockholders can sue the company for wrong deeds, for example, if the company has over stated the earnings and not been transparent to the stock holders regarding their financial health.

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