AMITY UNIVERSITY

AMITY LAW SCHOOL

S e me s t e r V BBA LL.B. (Hons.) Course

A doctrinal Research pro ect carried out on the topic o!

SHAREHOLDERS RIGHT TO PARTICIPATE IN THE MANAGEMENT OF THE COMPANY

In the Course of Company La ! As a part o! continuous e"aluation sche#e

S"#m$tte% &y' $rerna %upta BBA LLB(H)

S"#m$tte% To' Mrs. $u a $aul

DECLARATION
I do here&' declare that this $ro ect (or) entitled (SHAREHOLDERS RIGHT TO PARTICIPATE IN THE MANAGEMENT OF THE COMPANY) has &een prepared &' #e as a partial !ul!ill#ent o! the re*uire#ent o! BBA LL.B. (Hons). I also declare that I ha"e ac)no(led+ed the sources, authorities in #' $ro ect (or) accordin+l'. This (or) is #' o(n creation and hence it is not a pla+iari-ed (or).

Date'

************************************************ Name + S$,nat"re o- Resear./er

~.~

CERTIFICATE
This is to certify that the project entitled: S HAREHOLDERS R IGHT TO P ARTICIPATE IN THE M ANAGEMENT OF THE
COMPANY

under has been carried out by Ms. Prerna Gupta

under my supervision and guidance. The project is of her own effort which is completed after careful research and analysis of the research material available in previous works and various judicial pronouncements. The project is of the standard expected of a candidate for project submission in the course of Company Law of V semester of BBA L.LB. (Hons.) Programme.

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AC0NO1LEDGEMENT
A success!ul acco#plish#ent o! research pro ect si+ni!ies +reat contri&ution o! the Course Coordinator. In the present research pro ect Mrs. $u a $aul has contri&uted si+ni!icantl' in the acco#plish#ent o! this research pro ect. Without her support and +uidance this research pro ect (ould ha"e &een an unrealistic drea#. She has +uided the researcher throu+hout the preparation o! pro ect. Besides she also +a"e "alua&le inputs !or the research pro ect. At this #o#ent the researcher (ould li)e to heartil' ac)no(led+e contri&ution o! Mrs. $u a $aul in the preparation o! research pro ect. The researcher (ould ac)no(led+e the contri&ution o! li&rar' sta!! !or e/tendin+ such support to the researcher. Last &ut not the least researcher (ould li)e to than) A#it' La( School !or pro"idin+ such opportunit' in the !or# o! pro ect (here&' our )no(led+e is enhanced. Besides the researcher (ish to e/press +ratitude to those (ho #a' ha"e contri&uted to this (or) e"en thou+h anon'#ousl'. The researcher e/tends his sincere than)s to all.

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SYNOPSIS

TITLE SHAREHOLDERS RIGHT TO PARTICIPATE IN THE MANAGEMENT OF THE COMPANY STATEMENT OF PRO&LEM' Which ri+hts are &een +i"en to the shareholders o! the co#pan' and are the reall' e/ercised0

HYPOTHESIS' In order to conduct a research (or)1 so#e i#portant h'potheses are to &e !or#ulated. The !ocal points and assu#ptions are nor#all' a"aila&le throu+h the !or#ulation o! h'pothesis. The #a or h'potheses de"eloped on the &asis o! stud' o! a"aila&le literature and e"aluation o! pri#ar' as (ell as secondar' data and (or) done earlier includin+ related studies is that2 3Shareholders are the real o(ners o! the co#pan' and +et a real opportunit' to e/ercise their ri+hts connected (ith their participation in the co#pan'4

REVIE1 OF LITERATURE' Art$.2es Re-erre%'

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 5ai-u)a Masaa)i1 Corporate Governance in Asia OECD Principals and Beyond, 6ourth Round Ta&le on Capital Mar)et Re!or# in Asia789:7 April .77.. Bau#s Theodor1 Shareholder Representation and Proxy otin! in the European "nion# A Co$parative Study, $aper1 presented at the Con!erence on Co#parati"e Corporate %o"ernance Ha#&ur+1 Ma' :;9:<1 :88<. Muller 5aspar1 Corporate Governance and Glo%alisation &he Role and Responsi%ilities of Investors' =uha#el >incent1 Shareholder Ri!hts and the E(uita%le&reat$ent of Shareholders, The 6ourth Asian Roundta&le on Corporate %o"ernance1 Mu#&ai1 India1 ::9:. ?o"e#&er .77.. %reen Mar+arita1 Protection of shareholder ri!hts' ?estor Stilpon1 OECD Principles of Corporate Governance on Shareholder Ri!hts and E(uita%le &reat$ent# &heir Relevance to the Russian )ederation'

&oo3s Re-erre%' =ate' >.S.1 3Student %uide to Corporate La(41 (Ta/#ann Allied Ser"ice1 ; th ed.1 .77.). Ot/er So"r.e' Report o! the 5u#ar Man+ala# Co##ittee on Corporate %o"ernance Reco##endations Relatin+ to 3Shareholder4. O&4ECTIVE OF THE STUDY The !ollo(in+ Ai#s and O& ecti"es ha"e &een identi!ied !or this pro ect. :. .. To e/a#ine the ri+hts o! the shareholder@s +i"en &' the co#pan' To e/a#ine ho( corporate +o"ernance is related to shareholder@s ri+hts.

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A.

To e/a#ine the International Scenario o! corporate +o"ernance related to shareholder@s ri+hts.

RESEARCH METHODOLGY This is a =octrinal Research pro ect and the rele"ant #aterial !or this pro ect has &een collected !ro# the pri#ar' as (ell as secondar' sources. =octrinal Research is a research as (e all )no( that it is &ased on the principles or the propositions #ade earlier. It is #ore &ased on the sources li)e &oo)s o! the li&rar'1 and throu+h "arious (e&sites. At this point o! ti#e it is pertinent to re"ie( the literature !ro# (here the rele"ant #aterial has &een collected. 6or the purpose o! the said Research $ro ect the Researcher has collected the rele"ant #aterial !ro# &oo)s on Co#panies Act :8;B and also !ro# co##ittee reports.

CHAPTERI5ATION Chapter I I?TRO=CCTIO? Chapter II SHARDHOL=DR RI%HTS Chapter III I?STITCTIO?AL SHARDHOL=DRS

Chapter I> I?TDR?ATIO?AL SCD?ARIO

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 Chapter > CO?CLCSIO? A?= SC%%DSTIO?S

Ta#2e O- Contents Contents

Chapter I Chapter II Chapter III Chapter I> Chapter > Bi&lio+raph'

Pa,e No6
89:7 ::9:E :;9:< :F9:8 .79.: ..9.A
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SHAREHOLDERS RIGHT TO PARTICIPATE IN THE MANAGEMENT OF THE COMPANY

CHAPTER*I INTRODUCTION In the present (orld corporate +o"ernance has &eco#e a sensi&le #easure !or the lon+ ter# success o! the co#pan'. There has &een +reat interest in corporate +o"ernance &ecause de"elopin+ +ood corporate +o"ernance is essential to restore econo#ic "italit' and !osterin+ sustaina&le econo#ic +ro(th and de"elop#ent. 6or shareholders1 e!!ecti"e Corporate %o"ernance structures ha"e &eco#e i#portant criteria !or selectin+ the co#panies in (hich the' (ish to in"est (hen #a)in+ positi"e in"est#ent decisions. As the in"estors are interested in lon+ ter# &ene!its there!ore the' ha"e no( started to anal'se the corporate +o"ernance structure o! the co#panies. The in"estors ha"e no( started co#parin+ the "arious co#panies that (hich co#pan' has i#ple#ented the "arious reco##endations re+ardin+ corporate +o"ernance as #entioned in "arious i#portant codes. The i#portant purpose o! corporate +o"ernance is to sa!e+uard the shareholders ri+hts in the co#pan' and also to pa' special attention that there should &e e*ual treat#ent (ith the shareholder o! sa#e cate+or'. Corporate +o"ernance practices ha"e e#er+ed in !ree SHAREHOLDERS RIGHT TO PARTICIPATE IN THE MANAGEMENT OF THE COMPANY Page 9

#ar)et econo#ies as a set o! structural arran+e#ents (ith a ai# o! de"elopin+ a relationship &et(een the #ana+e#ent o! co#panies and the interests o! its shareholders. Su&se*uentl'1 corporate +o"ernance concerns e/tended to the interest o! other sta)eholders and e"entuall' to societ' at lar+e. There!ore a sound corporate +o"ernance s'ste# re*uires that shareholders can acti"el' participate in1 and e/ert in!luence on1 corporate strate+ic decision9#a)in+. The t(o i#portant principle o! corporate +o"ernance can &e elucidate as2 &he first principle# *&he corporate !overnance practices should !ive the shareholders a real opportunity to exercise their ri!hts connected +ith their participation in the co$pany,' &he second principle# *&he corporate !overnance practices should ensure e(ual treat$ent of shareholders +ho o+n the sa$e nu$%er of shares of the sa$e type -cate!ory.,' The shareholders are the o(ner o! the co#pan' and &' "irtue o! this the' ha"e "arious ri+hts and o&li+ation in a co#pan'. So#e o! the &asic ri+hts in the co#pan' are2 ensurin+ ade*uate #ethods o! o(nership re+istration1 con"e'in+ or trans!errin+ shares1 participatin+ in the co#pan'@s pro!its1 o&tainin+ in!or#ation on a ti#el' &asis1 participatin+ and "otin+ in +eneral shareholder #eetin+s. Alon+ (ith these there are "arious other ri+hts o! the shareholder and one o! the #ost i#portant a#on+ all these is the ri+ht to ta)e part in the #ana+e#ent o! the co#pan'. The #ost i#portant channel !or shareholders to in!luence ho( the co#pan' has to run is to attend and "ote at the +eneral asse#&l' #eetin+s.

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CHAPTER*II SHAREHOLDER RIGHTS PARTICIPATE IN GENERAL MEETINGS' The shareholders are in"ol"ed in ta)in+ #a or decisions a&out the co#pan'. These decisions are &asicall' ta)en in the +eneral #eetin+s. These decisions are in !or# o! 3resolution4. D"er' 'ear there is one #eetin+ o! the #e#&ers has &een or+ani-ed and this #eetin+ is called as the Annual %eneral Meetin+.: In addition to this i! there is an' e#er+enc' or need to transact ur+ent &usiness than an D/tra Ordinar' %eneral Meetin+ is called. The #ain purpose o! the annual +eneral #eetin+ is that the ulti#ate control o! the co#pan' is in hands o! shareholders. A%M +i"es the# an opportunit' to )no( a&out the (or)in+ o! the (or)in+ o! the co#pan' and to #a)e su++estion !or the i#pro"e#ent and pro+ress. The' can e"en chan+e the #ana+e#ent i! the' are not satis!ied. VOTING RIGHT' >otin+ at the +eneral #eetin+s o! co#panies is the #ost "alua&le and !unda#ental #echanis# &' (hich the shareholders accept or re ect the proposals o! the &oard o! directors as re+ards the structure1 the strate+'1 the o(nership and the #ana+e#ent o! the corporation. There!ore shareholder "otin+ is an inte+ral part o! the +o"ernance structure o! pu&licl' held corporations. Re*uirin+ shareholder consent !or an' !unda#ental chan+e in corporate polic' is a sa!e+uard !or the residual ris)9&earers o! a corporation a+ainst e/ post e/propriation &' the #ana+e#ent. The ri+ht to "ote assures the shareholders that (ithout their appro"al the &asic ter#s o! their in"est#ent cannot &e altered. Also1 "estin+ "otin+ ri+hts in shareholders is the onl' !easi&le #ethod to i#ple#ent #a or i#pro"e#ents o! corporate polic' that a!!ect the ter#s o! their in"est#ent. In other (ords (e can sa' that the "otin+ is the onl' #echanis# a"aila&le (ith the shareholders !or e/ercisin+ an e/ternal chec) on the &oard and the #ana+e#ent. It is
:

Section 166(1). Companies Act.

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i#portant to ensure that those "otes are cast in a #anner that is #ost consistent (ith the lon+9ter# &est econo#ic interests o! the co#pan'@s shareholders. Ri+ht to "ote is one o! the #ost e!!ecti"e tools !or pro#otin+ +ood corporate +o"ernance. To #aintain this e!!ecti"e tool all shareholders should recei"e e*uita&le treat#ent1 includin+ #inorit' and !orei+n shareholders and all shareholders should &e a&le to o&tain e!!ecti"e redress !or "iolation o! their ri+hts. More speci!icall'2 shares o! the sa#e class should ha"e the sa#e "ote1 in!or#ation on the "otin+ ri+ht should &e pro"ided &e!ore the purchase o! the share1 an' chan+es in "otin+ ri+hts should &e su& ect to shareholder "ote1 custodians or no#inees should cast "otes as a+reed upon (ith the &ene!icial o(ner o! the shares1 co#pan' procedures should not #a)e it undul' di!!icult or e/pensi"e to cast "otes1 insider tradin+ and a&usi"e sel! dealin+ should &e prohi&ited1 and #e#&ers o! the &oard and #ana+#ent should &e re*uired to disclose an' #aterial interest in transactions or #atters a!!ectin+ the corporation

Cnder the Indian Co#panies Act1 all holders o! e*uit' shares as on the date o! the Annual %eneral Meetin+ are entitled to "ote. A #e#&er@s "otin+ ri+ht are in proportion to his share o! the paid up capital in the co#pan'. . In case o! share issued (ith disproportionate "otin+ ri+ht as per#issi&le under Section FB1 the "otin+ ri+ht (ill &e as per the ter#s o! the issue o! the share.

Posta2 &a22ot'

Section 87, Companies Act.

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There is also a concept o! postal &allot under the co#panies Act. The concept has &een stated in the section :8.A (hich has &een &rou+ht in to !orce on :;th une .77:. The #ain idea &ehind postal &allot is to con!ir# the 3corporate de#ocrac'4. A This is li)e there are la)hs o! shareholder spread all o"er the countr' and it is not possi&le !or all o! the# to &e present in the #eetin+. There!ore to re#ed' this situation this concept has &een &rou+ht in this the shareholder can "ote &' post (ithout attendin+ the +eneral #eetin+. Pro7y' I! a shareholder o! the co#pan' is una&le to attend the #eetin+ than he can appoint a pro/' to attend the #eetin+.E Such another person #a' or #a' not &e the #e#&er o! the co#pan'. A pro/' is &asicall' one actin+ !or another. $ro/' (ho has &een appointed is entitled to attend the #eetin+ and can "ote on &ehal! o! the principal #e#&er. $ro/' is accepta&le in al#ost all part o! the (orld !or e/a#ple in Austria1 Beliu#1 6rance1 %er#an and Cnited 5in+do# etc. Alon+ (ith this there is a ne( concept e#er+in+ and that is o! Dlectronic sendin+ o! "ote and so#e countries ha"e alread' adopted this concept. 6or e/a#ple2 Bel+ian la( lea"es it to the co#panies and their &'9la(s to decide (hether shareholders can "ote &' #ail or in person. In 6rance >otin+ &' #ail is per#itted &' the la(. Shareholders #a' also "ote &' !a/1 as lon+ as the' also #ail the o!!icial &allot to the co#pan'. Basicall' all these e#er+in+ concept o! "otin+ is to +i"e e!!ect to the "otin+ ri+ht o! the shareholder. Because the onl' #echanis# a"aila&le (ith the shareholders !or e/ercisin+ an e/ternal chec) on the &oard and the #ana+e#ent is "otin+. There!ore it is i#portant to ensure that all the "otes ha"e &een casted properl'.

Datey V.S., Student Guide to Corporate La !, 1"8(#a$mann A%%ied Ser&ice, ' t( ed., )**)). E Section 176, +ndian Companies Act. SHAREHOLDERS RIGHT TO PARTICIPATE IN THE MANAGEMENT OF THE COMPANY
A

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APPOINTMENT OF DIRECTOR The shareholders1 (ho are the ulti#ate o(ner o! the co#pan' are authori-ed onl' to ta)e decision in respect o! #a or polic' #atter onl' to the e/tend speci!ied in the Co#panies Act. As (e )no( that there is a di"orce &et(een the #ana+e#ent and the o(nership and there!ore the shareholder cannot inter!ere in the da' to da' #ana+e#ent o! the co#pan'. 6or the sa#e reason the' appoint director to loo) o"er the co#pan'. O"erall super"ision and control o! a!!airs o! the co#pan' is entrusted to director as appointed &' the #e#&er. It is the dut' o! the directors to pool their )no(led+e and e/periences !or the &etter#ent o! the co#pan'. Shareholder has ri+ht to appoint the directors and to re#o"e the# as (ell

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CHAPTER*III INSTITUTIONAL SHAREHOLDERS In the present ti#e #an' countries o! the (orld ha"e institutional in"estors (ho are #a)in+ up a si+ni!icant percenta+e o! the total in"est#ent population. In the CSA1 !or e/a#ple1 institutional in"estors1 includin+ pension !unds1 hold around ;7G o! all listed stoc).; In India also Institutional shareholders ha"e ac*uired lar+e sta)es in the e*uit' share capital o! listed co#panies. The institutional in"estors are no( in the process o! &eco#in+ #a orit' shareholders in #an' listed co#panies and o(n shares lar+el' on &ehal! o! the retail in"estors. The' thus ha"e a special responsi&ilit' +i"en the (ei+hta+e o! their "otes and ha"e a &i++er role to pla' in corporate +o"ernance as retail in"estors loo) upon the# !or positi"e use o! their "otin+ ri+hts.B In the recent 'ears the !ocus o! the institutional in"estors has &een chan+in+ !ro# that o! 3tradin+4 to lon+er9ter# o(nership o! shares1 (hich has an i#plication on part$.$pat$on $n t/e mana,ement o- t/e .ompan$es in (hich the' in"est. ?o( the institutional shareholders are !ocusin+ #ore on the lon+9ter# relationship (ith the co#panies &' retainin+ the o(nership o! the shares.The paradi+# shi!t o! institutional in"estors to(ards lon+ ter# o(nership o! the shares is ha"in+ a #a or in!luence on corporate +o"ernance in the sense that institutional in"estors re*uire a +reater le"el o! accounta&ilit' and transparenc'1 and ha"e the &ac)9o!!ice resources to ensure that the' can pla' an e!!ecti"e role as concerned and acti"e shareholders.<

(ttp,-.commerce..o&./(-do n%oads-c0.o&ernance-1oo21+nside.pd3. 4as &isited on )'-*"-)**5.6 B 7eport o3 t(e 8umar 9an.a%am Committee on Corporate Go&ernance : 7ecommendations 7e%atin. to S(are(o%der! Cf. (ttp,--in..eocities.com-2sta/i%ity-in/an2-corp.o&ern-s(are(o%ders.(tm% 4as &isited on )6-*"-)**56.
<

Supra 3.n 1

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In this re+ard it is "er' pertinent to the ODC= F principles o! Corporate %o"ernance. An i#portant e/tract !ro# ODC= $rinciples o! Corporate %o"ernance2 *Controllin! shareholders, +hich $ay %e individuals, fa$ily holdin!s, %loc alliances, or other corporations actin! throu!h a holdin! co$pany or cross shareholdin!s, can si!nificantly influence corporate %ehavior' As o+ners of e(uity, institutional investors are increasin!ly de$andin! a voice in corporate !overnance, This e/tract !ro# the ODC= principle re!lect the +ro(in+ interest o! institutional shareholder to participate in the #ana+e#ent o! the co#pan' &' ha"in+ lon+er ter# o(nership o! the shares in the co#pan'. The 5u#ar Man+ala# Co##ittee Report on Corporate %o"ernance has also #ade certain reco##endations (ith re+ard to the institutional shareholder as to82 Ta)e acti"e interest in the co#position o! the Board o! =irector Be "i+ilant Re+ular and s'ste#atic contact at senior le"el !or e/chan+e o! "ie(s on #ana+e#ent1 strate+'1 per!or#ance and the *ualit' o! #ana+e#ent. Dnsure that "otin+ intentions are translated into practice D"aluate the corporate +o"ernance per!or#ance o! the co#pan'.

The a&o"e reco##endations1 principles H practices else(here in the (orld ha"e indicated that institutional shareholders &ecause o! their collecti"e sta)e can su!!icientl' in!luence the policies o! the co#pan' so as to ensure that the co#pan' the' ha"e in"ested in co#pliance (ith the corporate +o"ernance code in order to #a/i#i-e shareholder "alue. At the sa#e ti#e the acti"e participation o! institutional in"estors can &rin+ a&out
F 8

;r.ani<ation o3 =conomic Corporation > De&e%opment. Supra 3.n ) SHAREHOLDERS RIGHT TO PARTICIPATE IN THE MANAGEMENT OF THE COMPANY

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a +reater scrutin'1 accounta&ilit' and transparenc' o! co#panies. This #a)es it dou&l' i#portant that institutional shareholders ta)e their role as in"estors seriousl' and act accordin+l' !or the enhance#ent o! +ood corporate +o"ernance.

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CHAPTER*IV INTERNATIONAL SCENARIO The de"elop#ent o! the ODC= $rinciples o! Corporate %o"ernance (as spar)ed &' the Asian !inancial crisis o! :88<9:88F.:7 At the hei+ht o! the :88<98F !inancial crises1 the ODC= (as as)ed &' the %< to de"elop international standards on corporate +o"ernance that could &e use!ul to ODC= Me#&ers and non9Me#&er countries ali)e. In Ma' :8881 the ODC= $rinciples (ere !or#all' endorsed &' ODC= Me#&er countries. While the ODC= $rinciples (ere de"eloped (ith pu&licl' listed co#panies in #ind1 #an' o! these $rinciples are also applica&le to pri"atel'9held enterprises. The ODC= $rinciples co"er !i"e #ain areas2 :) the ri+hts o! shareholdersI .) the e*uita&le treat#ent o! shareholdersI A) the role o! sta)eholdersI E) disclosure and transparenc'I and ;) the responsi&ilities o! the &oard. In the OCD= principles o! corporate +o"ernance there is a clear #ention that the )e' shareholder ri+hts are the participation in an' decision concernin+ !unda#ental corporate chan+es and the ri+ht to &e in!or#ed o! options to address these chan+es. These !unda#ental chan+es can &e a#end#ents in the corporate chapterI authori-ation o! additional sharesI and e/traordinar' transactions that result in a !unda#ental chan+e o! the asset structure. This principle is totall' in !a"or o! the shareholder ri+ht to ta)e part in the #ana+e#ent o! the co#pan'. The second chapter o! the $rinciples e#phasi-es that all shareholders1 includin+ #inorit' and !orei+n shareholders1 should &e treated e*uita&l' &' controllin+ shareholders1 &oards and #ana+e#ent. Insider tradin+ and a&usi"e sel!9dealin+ should &e prohi&ited. The $rinciples call !or transparenc' (ith respect to distri&ution o! "otin+ ri+hts and the (a's
:7

8ai<u2a 9asaa2i, Corporate Governance in Asia OECD Principals and Beyond, ?ourt( 7ound #a/%e on Capita% 9ar2et 7e3orm in Asia*":1* Apri% )**), #o2yo, C3 . (ttp,-.oecd.or.-dataoecd-5@-5-)*77@"@.pd3. ,4 &isited on )8-*"-)**5.6

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"otin+ ri+hts are e/ercised. The' also call !or disclosure o! an' #aterial interests that #ana+ers and directors ha"e in transactions or #atters a!!ectin+ the corporation. :: At the international le"el1 the ODC= $rinciples o! Corporate %o"ernance ha"e e#er+ed as the international &ench#ar)s on +ood corporate +o"ernance. The IC%?:. principles also reco+ni-es the o& ect stated in the ODC= principles. The IC%? principle states that there should not &e an' #a or strate+ic chan+es in the core &usiness should not &e (ithout the prior consent o! the shareholders. The C5 Co#&ined Code (Januar' :88F) states that the process and procedure !or conductin+ annual +eneral #eetin+ should allo( the shareholder to ha"e !air and e*ual participation. The %er#an Code (Januar' .777) states that the con!idence o! the shareholder and other in"estors should &e pro#oted in the international #ar)et. The Duropean Cnion and its #e#&er states are totall' in !a"or o! the shareholder participation in the #ana+e#ent. It sates that the shareholder to &e treated e*uita&l' and there should &e no &arrier (ith re+ard to the shareholder attendin+ the +eneral #eetin+1 (hether in person or &' pro/'. There!ore it is clear that #ostl' all the countries around the (orld are no( reco+ni-in+ the ri+ht o! the shareholder. D"er' countr' all o"er is no( ta)in+ steps to #a)e !air and e*uita&le participation o! the shareholders.

::

Aestor Sti%pon, OECD Principles of Corporate Governance on Shareholder Rights and Eq ita!le "reat#ent$ "heir Relevance to the R ssian %ederation, C3. (ttp,-.im3.or.-e$terna%-pu/s-3t-seminar-)***-in&est-pd3-nestor.pd3. 4 &isited on 5*-*"-)**5.6
:.

+nternationa% Corporate Go&ernance Aet or2.

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CHAPTER*V CONCLUSION AND SUGGESTIONS The shareholders are reall' the ulti#ate o(ner o! the co#pan'. The' &ear all the ris) o! the &usiness and stand to +ain the pro!its arisin+ out o! it. The' ha"e hea"' ris) on their shoulders &ecause i! the &usiness (ill ha"e pro!it then the' (ill also earn di"idends &ut i! the &usiness (ill incur losses than their #one' (hich is in"ol"ed is also +one. Shareholder has "arious ri+hts in the co#pan'. One o! the i#portant ri+ht a#on+ the# is the ri+ht to participate in the #ana+e#ent o! the co#pan'. D"er' shareholder has a ri+ht to ta)e part in the #ana+e#ent o! the co#pan' as &' participatin+ and "otin+ in the annual +eneral #eetin+ either personall' or throu+h pro/ies. Ta)in+ all the in!or#ation a&out the #ana+e#ent o! the is also an i#portant ri+ht as possessed &' the shareholder. In the present scenario corporate +o"ernance is holdin+ "er' i#portant place in the corporate (orld. D"er' co#pan' in the (orld is tr'in+ to incorporate the &asic principles o! corporate +o"ernance. One o! the #ost i#portant principles o! corporate +o"ernance (hich has &een ac)no(led+ed all o"er the (orld is the shareholder ri+ht to participate in the #ana+e#ent o! the co#pan' and to recei"e e*ual treat#ent. There!ore it is "er' clear that !or the &etter per!or#ance o! the co#pan' there should &e proper transparenc' and shareholders should &e (ell in!or#ed a&out the #ana+e#ent o! the co#pan' and there should &e proper participation on the part o! the shareholders. There are so#e su++estions (ith re+ard to the shareholder participation and the e*uita&le treat#ent o! the shareholder in the co#pan' can &e increased. Separatin+ o(nership and #ana+e#ent (ill help to reduce the con!licts &et(een #a orit' Shareholders and #inorit' shareholders. SHAREHOLDERS RIGHT TO PARTICIPATE IN THE MANAGEMENT OF THE COMPANY Page 20

 Institutional shareholder can &e encoura+ed &' the %o"ern#ent policies as it (ill i#pro"e &oth the o"erall *ualit' o! in"estors and co#panies in (hich to in"est. There are #an' (a's !or +o"ern#ents1 institutions1 co#panies and the press and other #edia to co##unicate (ith the in"est#ent co##unit' to increase shareholder participation and con!idence. 6or pu&licl' listed co#panies1 the pri#ar' +oal should &e to share accurate and transparent co#pan' in!or#ation (ith the in"est#ent co##unit' and to ensure +ood per!or#ance !or all shareholders in the co#pan'. There is a need to #a)e la(s in order to i#pro"e participation at shareholder #eetin+s and throu+h the pro/' "otin+ process and are loo)in+ at allo(in+ +reater reliance on ne( technolo+' !or &etter corporate +o"ernance. Dlectronic co##unication techni*ues in the trans#ission o! "otin+ instructions should &e encoura+ed.

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&I&LIOGRAPHY' Art$.2es Re-erre%' 5ai-u)a Masaa)i1 Corporate Governance in Asia OECD Principals and Beyond, 6ourth Round Ta&le on Capital Mar)et Re!or# in Asia789:7 April .77.. Bau#s Theodor1 Shareholder Representation and Proxy otin! in the European "nion# A Co$parative Study, $aper1 presented at the Con!erence on Co#parati"e Corporate %o"ernance Ha#&ur+1 Ma' :;9:<1 :88<. Muller 5aspar1 Corporate Governance and Glo%alisation &he Role and Responsi%ilities of Investors' =uha#el >incent1 Shareholder Ri!hts and the E(uita%le&reat$ent of Shareholders, The 6ourth Asian Roundta&le on Corporate %o"ernance1 Mu#&ai1 India1 ::9:. ?o"e#&er .77.. %reen Mar+arita1 Protection of shareholder ri!hts' ?estor Stilpon1 OECD Principles of Corporate Governance on Shareholder Ri!hts and E(uita%le &reat$ent# &heir Relevance to the Russian )ederation'

&oo3s Re-erre%' =ate' >.S.1 3Student %uide to Corporate La(41 (Ta/#ann Allied Ser"ice1 ; th ed.1 .77.).

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http2,,(((.ellipson.co#,!iles,de&ate,de&ateKsu##erK7.e.pd! http2,,(((.!!hs .co#,c#e#os,7A78:<K(or)ersKco##ittee.pd! http2,,in.+eocities.co#,)sta&ilit',in&an),corp+o"ern,shareholders.ht#l http2,,(((.oecd.or+,dataoecd,AE,A,.7<<E8E.pd!. http2,,(((.oecd.or+,dataoecd,E8,:.,.EFEF;E.pd!. http2,,(((.corp9+o".or+,&d,d&.phpA0d&KidLE.AH&aseKidLA http2,,(((.i#!.or+,e/ternal,pu&s,!t,se#inar,.777,in"est,pd!,nestor.pd!. http2,,(((.co##erce.+o".&h,do(nloads,cK+o"ernance,Boo):Inside.pd!.

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