Business Stakeholders

Definition:

Owners and shareholders are individuals or entities that have a financial interest in a business by holding shares in the company. They expect the business to perform well to generate returns on their investment.

Financial Interest and Expectations

Investment in the Company

• Owners/shareholders have invested money by purchasing shares in the company, making them part-owners.
• Example: An individual buys shares in a technology company with the expectation of financial returns.

Expectations of Growth and Prosperity

• Owners/shareholders expect the business to thrive, leading to a rise in share prices (capital gain) and the receipt of dividends.
• Example: A shareholder anticipates that a company's stock value will increase over time, allowing them to sell their shares at a profit.

Dividends

• Shareholders receive a portion of the company's profits in the form of dividends based on the number of shares they hold.
• Example: If a company earns profits, shareholders receive dividends as a return on their investment.

Influence and Involvement

Influence on Business Operations

• Owners/shareholders can influence the business by making financial decisions.
• Example: Shareholders may vote to approve or reject a significant business decision, such as a merger or acquisition, during the Annual General Meeting (AGM).

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Owners/shareholders- interest and influence

Management Decisions

• Some owners appoint managers to operate the business, while others prefer to be actively involved in day-to-day operations.
• Example: A family-owned business may have family members as both owners and managers, leading to a close involvement in daily business affairs.

Profit Motive

• Owners/shareholders have a vested interest in the business's profitability and financial success.
• Example: Shareholders may advocate for cost-cutting measures or strategic changes to enhance the company's profitability.

Role in Corporate Governance

Voting Rights

• Shareholders are entitled to vote at the Annual General Meeting (AGM) to elect the Board of Directors.
• Example: Shareholders collectively have the power to select the individuals who will oversee the company's operations.

Board of Directors

• The elected Board of Directors is responsible for making strategic decisions on behalf of owners/shareholders.
• Example: The Board may appoint a CEO or approve major investments that impact the company's direction.

Conclusion:

In conclusion, owners and shareholders play a crucial role in a business as they have a direct financial interest in its performance. They expect returns on their investments in the form of capital gains and dividends and can influence the company through financial decisions and voting rights. Additionally, they participate in corporate governance by electing the Board of Directors. Their interests and influence are vital factors in shaping a business's direction and success.