Your Shareholder Rights
When you buy common stock in a company, you become a part owner of the company and are known as a shareholder. As a shareholder, you have certain rights that come with ownership. These include the right to:
- Transfer your shares
- Receive dividends, or a portion of the company profits
- Vote your views on certain issues related to the company
You have the right to hold or transfer your shares by selling them or bequeathing them to heirs.
You’re entitled to receive dividends if the company decides to pay them, which it may or may not do. If paid, dividends are typically issued on a quarterly basis.
A company may decide to lower or eliminate dividends for a variety of reasons, such as funding an expansion, financing an acquisition or repurchasing some of its shares. A company may also decide not to issue dividends if its earnings falter or it acquires too much debt.
You also have the right to inspect the financial records and books of the company in which you’re invested. Companies typically publish this information in their annual reports on Form 10-K, which generally include audited financial statements. These reports are filed with the Securities and Exchange Commission (SEC) and are made available to shareholders.
Right to Vote
As a shareholder, you have the right to vote on certain corporate matters that may include:
Whether you vote proxies yourself or give your intermediary or someone else the authority to vote your proxies, voting is an important way to ensure that the company you have invested in practices good corporate governance. Proxy voting is essentially a system of checks and balances that ensures the company is accountable and transparent in its actions.