What Are The Duties Of A Shareholder Agreement Lawyer?

December 14, 2022    commerciallawyersinperth
What Are The Duties Of A Shareholder Agreement Lawyer?

As a shareholder, you may be wondering about what rights and duties you have. The answer to this question can be based on various factors such as the class of your shares, the constitution of your company and if you are a shareholder or a public or private company.

As a shareholder, you must be aware of your rights and duties. Before you know more about commercial law perth, you must know that your rights can allow you to have a great impact on your company. This way, you can enjoy the benefits of being a shareholder and when you are aware of your duties, it can ensure that you perform your role and not be a part of troubles. Read the guide below to learn more about your duties as a shareholder.

What Or Who Is A Shareholder?

To be a shareholder as per the law, you must be an individual or a legal entity that is the owner of part of a company via shares. The shares issued to shareholders as owners of the company represent a piece of the company. As ownership and control are separated, you do not have to participate in the daily management of the company.

What Are Some Factors That Can Affect Shareholder Rights and Duties?

The shareholder’s rights and duties that are outlined in the Corporations Act will depend on the following factors:

  • The first thing is, it will depend on your class of shares and there are two main types of shares namely ordinary or preference shares. Ordinary shares can let you vote on decisions that all the current company shareholders vote on. Other than that, you will also be entitled to a share of the company’s profits when the dividends are issued.

    Owning preference shares indicate that you are given preferential treatment when compared to ordinary shareholders. For instance, you will be given priority if your company turns insolvent or is winding up in matters of getting repaid. You will also have the right to receive a fixed dividend payment.

  • After this, your company’s constitution, replaceable rules and terms of the company shareholder’s agreement can affect your rights and duties. All these can help set out the rules about your role, duties and rights in the company.
  • Before you opt to hire a shareholder agreement lawyer, you must know that your rights will be affected based on whether you are a public or lone company shareholder. If you are a shareholder of a public company, the company will need to send you a copy of the annual report around 21 days before the Annual General Meeting (AGM).

What Are Some Of The Rights of Shareholders?

Some of the rights of shareholders that you must be aware of are as follows:

1. Right To Access The Financial Records

As you are the owner of a company, you will have the right to inspect your company’s books and records to see how they are performing. The company will be able to provide you with this right by giving you audited financial statements, director’s reports or financial reports. As a shareholder, you will have the opportunity to inspect your company’s register for free.

2. Right To Sue For Improper Acts

You will have the right to sue the officers, executives and directors for all their wrongful actions. It is also essential to note that ASIC does not get involved with any disputes or problems of proprietary firms.

3. The Right To Vote On Important Issues

Your voting rights will be able to enable your participation in corporate decision-making. Some of the voting powers that you have as a shareholder are as follows:

  1. You can appoint directors of the company via an ordinary resolution being passed at the shareholder’s meetings
  2. You can dismiss the current directors from the board of directors
  3. You can easily make proposals for the company
  4. You can opt to vote for structural changes like mergers, liquidation or acquisitions.

4. The Right To Attend The Annual General Meeting Or AGM

As per commercial law, the AGM or Annual General Meeting is an annual meeting that is held for the company’s shareholders.

  1. During such meetings, the directors of your company will present you with the company’s annual report and then will comment on the company’s performance in the specific financial year.
  2. During the meeting, as a shareholder, you may be able to elect new directors to join the board of directors, discuss the remuneration of directors and also ask questions about the company’s future.
  3. The members of the company will be able to vote via a show of hands through a poll.

5. The Right To Transfer Ownership

The shareholders of publicly listed companies have the right to trade their shares or interest on the ASX or Australian Stock Exchange. An essential part of this share is liquidity and this can let shareholders easily sell their shares or ownership interest on the ASX or Australia Stock Exchange. But one thing to keep in mind is you might be unable to sell your shares.

6. You Can Participate In Corporate Actions And Share In The Company’s Profits

As a shareholder, you must know more about shareholder agreements. Shareholders are known to have the right to receive dividends, share buybacks, distributions and also share mergers and issues.

What Are The Duties Of A Shareholder?

As a company is a separate legal entity, as a shareholder, you will not be responsible for the company’s legal obligations. This is why the assets of a company are not considered its shareholders. You will also not be entitled to anything other than an ownership interest in the company.

Before you choose a commercial lawyer, you must know that a shareholder is also not responsible for any of the company’s debt. But an exemption to this is that you are liable to pay the company any unpaid amount on your shares as a shareholder.

Contact Commercial Lawyers Perth

If you need proper counsel about a shareholder’s agreement being a shareholder, you can choose to hire the best lawyers in your area. Contact Commercial Lawyer Perth to access the best commercial lawyers who can help you know your rights as a shareholder and provide you with the best advice.

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