What Is The Role Of Shareholders In A Public Limited Company (PLC)?

Roles and Functions of Shareholders in a Public Limited Company (PLC)

1. Ownership and Equity Participation: In a PLC, shareholders are the company's owners, with their ownership stake determined by the number of shares they hold, where more shares equate to a larger ownership interest.

2. Voting Rights: Shareholders have the right to vote on key company matters, like electing directors and approving mergers, with their voting power tied to their share ownership.

3. Annual General Meetings (AGMs): Shareholders are entitled to participate and vote in the company's AGMs, where they can assess performance, review financial reports, and endorse auditor appointments.

4. Dividends and Income: Shareholders have the right to receive dividends, which represent a portion of the company's profits distributed to them, and the company's board of directors determines the specific dividend amount.

5. Right to Information: Shareholders possess the right to access company information, including financial statements and operational details, emphasizing the importance of transparency for informed decision-making.

6. Share Transfer: Shareholders can typically transfer or sell their shares to others, subject to any restrictions outlined in the company's articles of association and applicable laws.

7. Influence on Corporate Governance: Shareholders wield influence over corporate governance by exercising their voting rights, enabling them to elect directors, endorse executive compensation plans, and suggest resolutions for consideration at AGMs.

8. Legal Remedies: Shareholders have legal recourse if they suspect actions against their interests by the company or its management, which can involve pursuing lawsuits or taking legal action under corporate law.

9. Proxy Voting: Shareholders who cannot attend AGMs in person have the option to designate proxies to vote on their behalf, enabling participation in corporate decisions when physical presence is not possible.

10. Engaging with Management: Shareholders can influence corporate decisions and practices by engaging with the company's management and board through shareholder proposals, letters, and dialogues.

11. Activism and Advocacy: Some shareholders, particularly institutional investors, engage in shareholder activism and advocacy to push for changes in a company's strategy, governance, or social and environmental practices.

12. Monitor Company Performance: Shareholders closely monitor the company's performance and financial results to assess the business's overall health and make investment decisions.

13. Rights in Corporate Transactions: Shareholders possess rights in corporate transactions like mergers, acquisitions, or asset sales, allowing them to vote on these actions and dissent if they disagree with the proposed course of action.