Stakeholders and their rights
The group of people who own the most basic security an investor is able to obtain are known as Common stakeholders. This set of people normally have an interest in a company, and they can either affect or be affected by the business.
They own stock with the lowest priority, this imply that they are been paid last when there is release of dividends. They have the right to weigh on significant matters through vote and also have the right at any point to seek additional information from the management about any part of the company business.
Conclusion
Even if this section of stakeholders has some power to influence company’s policy, they are afforded certain basic rights due to their input in sustaining the firm through their financial investment in stock.
Question B: The Rights of Preferred Stakeholders
Preferred stakeholders refer to investors who have more claim on the assets of the company than common stakeholders. Although their remuneration is prioritized, they do not vote on company decisions. Their rights include provisions like being preferred during the award of dividends and liquidation of companies over common stakeholders. They also can convert the investment to common stock at will (Bodie, 2013). However, even though preferred stakeholders cannot vote, they can block major decisions made by the company board. They can also appoint individuals to the board and demand that the organization offers share acquisition to the public. If the founders of the company sell it, they can proportionately sell their stock too.
Conclusion
To conclude, one can assert that preferred stockholders have more financial rights than common stakeholders. Even if they do not have the right to vote, preferred stockholders can impose their power by blocking issues passed by common stakeholders.
Reference
Bodie, Z. (2013). Investments. New York: McGraw-Hill.
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