Shareholders statutory rights

I would like to stress the legal point that, it is important for each shareholder in joint-stock companies to learn that, the company law gives shareholders certain legal rights and protection against specific acts by the company, the Board and the management.

The statutory protection is provided for in the company law, wherein, the ordinary and the extraordinary general assemblies are not authorized to take, add or amend any of the legal rights conferred on the shareholder by the law and or the Articles of Association (A o A) of the company.

This important statutory right has been given to all shareholders regardless of the fact that they are individuals or institutions, small or big, etc. This clear stand constitutes a healthy environment and gives each shareholder the necessary boost to preserve such rights all through his holder-ship.

It would be interesting to mention that many shareholders are either ignorant about this de jure situation or they don’t understand that this statutory privilege should be exercised all through their equity shareholding.

Corporate culture is needed and should be maintained by all parties in each company. The statutory rights protected by the company law and the (A o A) are many, such as the right to attend meetings, right to participate in discussions, right to call for meetings due to certain reasons and ultimately, the right to exercise voting powers during assemblies, to receive dividends, to examine books, accounts and the like.

At certain times there could be difference of opinion in certain issues between the Board, (executive management) on one hand and the shareholders on the other hand. We believe this is healthy and very normal, however, the differences shall not affect or jeopardize the statutory rights given to the shareholders including attendance of assemblies or participation in discussing any issue during meetings.

Differences or disagreements could happen when shareholders are active, for example, when the company is planning merger or acquisition or involvement in mega projects, etc. There are examples wherein extensive debates had been going on in many countries between shareholders and the Board regarding such issues.

Some companies, have changed or stopped projects after facing resistance from shareholders. We would like to see such hot debates in our region as it is high time for shareholders to be vigilant in exercising their powers for the betterment of the company and the community.

Each shareholder in the company and all shareholders collectively shall join forces and stand firmly to exercise their rights and to get them by all means at all times. Otherwise, the shareholder-ship will be of no value nor taste, but a piece of paper or a mere social image. We need to establish appropriate corporate culture and benefit from corporate governance principles for the joint interests.

Each shareholder and likewise each company shall jointly work hand-in-hand to achieve this mutual end-result. Don’t be passive but active and as the law supports you, better you support yourself and look for your legal rights. To give clear idea, it is also important to mention that, likewise, there are statutory rights for the company, the Board and the management.

Necessary details will be highlighted in due course. The author is a Common Law lawyer. He practices and teaches law for more than 46 years. His past legal experience includes, Ministry of Justice Sudan, Central Bank of Oman, Central Bank of UAE, BBK Group. At present, Founder & CEO of Dr. AbdelGadir Warsama Consultancy W.L.L. – Bahrain & Dubai.

(The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of the Daily Tribune)