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What are the rights of a stakeholder in a public company?
I am one, and would like to know what I can ask/demand of management.
- Andrew SLv 41 decade agoFavorite Answer
It depends on what you mean by "stakeholder."
Anyone, conceivably, can be a stakeholder. Your legal rights depend on what kind of a stakeholder you are.
Bondholders (of senior bond issues) have the first claim on corporation property in the event of a liquidation (aka, business failure). Next in line are junior bondholders, then preferred shareholders, then common stockholders.
Bondholders can sometimes (rarely in practice) force a liquidation if certain loan agreements (financial ratios/performance, for example) are violated.
Common stockholders have the right to vote in or vote out the board of directors, who then appoint senior level managers (CEO's, CFO's, etc.)
Directors also may need to submit certain actions to shareholders for a vote (such as a merger, reorganization, etc.), and are also responsible for other tasks such as audit, executive salaries, stock options, etc.
At some board meetings or at annual shareholder meetings shareholders can ask questions of senior managers or directors. In practice, these meetings are often scheduled to avoid unnecessary hassle or scrutiny for the Board of Directors and for senior management, and only large institutional investors or other controlling shareholders attend.
At the annual meetings, votes are taken for directors - the largest shareholders have the most votes.
Other stakeholders have the legal rights normally associated with employees, vendors, partners, lenders, etc.
In general, if shareholder value is maximized, all other stakeholders are treated properly, also.Source(s): Investopedia.com; Gramm and Wiley, "Corporate Finance," also Google or search for "the Matrix of Common Interests in a Corporation."
- 1 decade ago
I could be way off. I dont think you have any rights but the right to vote via proxy.
I believe preffered stockholders have more rights, and bondholders have even mroe than them. I believe common stockholders are the last man on the totem pole.
I would call the company in question (investor relations dept.) and ask them directly.