Pitch Engine


Whether you’re the shareholder of a multinational fashion brand or a small firm of lawyers and solicitors in Wodonga, there are certain rights and responsibilities that come with owning a portion of the business. Understanding these rights and responsibilities is essential for protecting your interests and ensuring you can actively participate in corporate decision-making processes. With that in mind, here are five key legal rights and responsibilities to be aware of:

1. Right to Vote

Fundamental for shareholders is the right to vote on matters that affect the company. Shareholders should typically be given the right to vote on issues such as the election of the board of directors, amendments to the company's articles of incorporation or bylaws, mergers or acquisitions, and other significant corporate decisions. The number of votes each shareholder is entitled to cast is generally proportionate to their ownership stake in the company.

Responsibility: With the right to vote comes the responsibility to make choices that support the best interests of the company and your fellow shareholders. This means you should educate yourself about the issues up for a vote, attend shareholder meetings, and make your choices thoughtfully and in accordance with your assessment of what’s best for the company.

2. Right to Receive Dividends

Shareholders are entitled to receive dividends on a regular basis. Dividends are typically paid in cash, but they can also take the form of additional shares of stock or other property. The amount of dividends each shareholder receives is determined by the company's board of directors and is usually based on the number of shares owned.

Responsibility: While receiving dividends is a perk of ownership, shareholders also have a responsibility to understand that dividends are not guaranteed. The company's board of directors has the discretion to decide whether to declare dividends and how much to pay, taking into account various factors such as recent financial performance, capital needs, and growth prospects. Dividends may fluctuate over time and are not a reliable source of income.

3. Right to Inspect Corporate Records

Shareholders have the right to inspect certain corporate records and documents to ensure transparency and accountability within the company. These records may include financial statements, meeting minutes, shareholder lists, and other documents that provide insight into the company's operations, performance, and governance practices. To gain access, you generally need to submit a request to the company's management or board of directors.

Responsibility: Companies may impose reasonable restrictions on the inspection process to protect confidential or proprietary information and prevent misuse of corporate records. You must respect these limitations and use your inspection rights responsibly.

4. Right to Sue for Corporate Mismanagement

Shareholders have the right to bring legal action against the company or its officers and directors for acts of mismanagement, fraud, or other breaches of fiduciary duty. 

Responsibility: Shareholders considering filing a derivative suit should carefully evaluate the merits of their claims and consider alternative methods of resolving disputes, such as engaging with the company's management or board of directors, before resorting to litigation. Bringing a derivative suit can be costly and time-consuming, so you must weigh the potential benefits and risks carefully and seek legal advice before launching your offensive.

5. Responsibility to Exercise Due Diligence

As a shareholder, you should stay informed about the company's financial condition and strategic direction. Monitor corporate governance practices and potential conflicts of interest, actively participate in shareholder meetings, ask questions, and voice your concerns when appropriate to ensure your interests are represented and protected.

By understanding and exercising these rights and responsibilities responsibly, you can promote transparency, accountability, and long-term value creation within the companies you invest in.