Rights and responsibilities of shareholders in companies

Rights and responsibilities of shareholders in companies

Corporations are one of the main legal forms adopted by companies to carry out economic activities. In this type of company, the shareholders play a fundamental role, since they contribute capital, goods or labor and participate in decision-making. However, being a shareholder in a commercial company not only brings benefits, but also responsibilities.

Shareholders’ rights

The shareholders in a commercial company have several rights, which may vary according to the type of company (joint stock company, limited liability company, etc.), among others:

1. Right to participate in corporate decisions. Shareholders have the right to participate in general meetings and to exercise their vote according to their share in the capital stock. This allows them to influence the company’s decisions.
2. Right to information. The shareholders have the right to know the financial and operating situation of the company. This includes the review of financial statements, management reports and any other document relevant to the management of the company.
3. Right to receive dividends. When the company makes profits, the shareholders are entitled to receive dividends in proportion to their participation, unless otherwise agreed in the bylaws.
4. Right to transfer shares. Depending on the type of company, the shareholders may transfer or sell their shares to third parties, although in some cases this may be subject to restrictions established in the articles of association or in the shareholders’ agreement, if applicable.
5. Pre-emptive subscription rights. In the event of the issuance of new shares, the current shareholders usually have a preferential right to acquire them before third parties, in order to maintain their proportion of participation in the company.
6. Right to challenge corporate resolutions. If a shareholder considers that a resolution adopted at the general meeting is detrimental or contrary to the law or the articles of association, he/she has the right to challenge it in court.

Shareholders’ obligations

Just as the shareholders have rights, they also acquire a series of obligations when they become part of a business partnership. Some of the most relevant are:

1. Obligation to make the committed contributions. The shareholders must comply with the payment of their contributions in the capital stock, either in money, goods or rights, as stipulated in the articles of association of the company.
2. Obligation to assume losses. Depending on the type of company, the shareholders may be obliged to assume losses of the company up to the limit of their contribution or, in some cases, to respond with their personal assets if the company has an unlimited liability structure.
3. Obligation to comply with the bylaws and corporate agreements. The shareholders must respect the rules established in the company’s articles of association and abide by the resolutions adopted at general meetings, even if they have not voted in favor of them.
4. Non-competition obligation. In some partnerships, shareholders may be obligated not to engage in business that directly competes with the business of the firm, unless expressly authorized by the other shareholders.
5. Confidentiality obligation. The shareholders have the duty to keep confidential the strategic and financial information of the company, avoiding its disclosure to third parties that may harm the company.
6. Obligation to contribute to the operation of the company. Although it is not always mandatory, in some companies the shareholders must actively participate in the management and administration of the company, especially in limited liability companies or those with a smaller structure.

In short, being a shareholder in a company entails both rights and obligations that seek to balance the relationship between the members and ensure the proper functioning of the company. The rights allow the shareholders to participate in the decisions and benefit from the successes of the company, while the obligations ensure the fulfillment of commitments and the protection of the interests of the company and the other partners. Knowledge of these aspects is essential for anyone wishing to be part of a commercial company and contribute to its development in an effective and responsible manner.