What are the rights of shareholders?

What are the rights of shareholders?

• A. Rights to make business decisions independently
• B. Rights to approve fundamental changes and receive dividends
• C. Rights to negotiate salaries of corporate officers
• D. Rights to vote on governmental regulations

Answer: (B)

Shareholders have specific rights that are fundamental to their role in a corporation. One of the primary rights of shareholders is the ability to approve significant corporate actions, such as mergers, acquisitions, and amendments to the corporate charter—these can significantly affect their investment. Additionally, shareholders are entitled to receive dividends when declared by the board of directors, which represents a portion of the company's profits distributed to its owners. This combination of the right to approve fundamental changes to the corporation and to receive dividends embodies the essential interests of shareholders in protecting their investment and obtaining a return on it. The other options describe rights that do not typically belong to shareholders. For instance, shareholders do not have the authority to make independent business decisions for the corporation, as this is reserved for the management team. Negotiating salaries of corporate officers is also outside the purview of shareholders; this responsibility lies with the board of directors. Lastly, while shareholders do have voting rights within the corporation, they do not vote on governmental regulations, which are outside the corporate framework and are determined by regulatory bodies and government authorities.

Shareholders have specific rights that are fundamental to their role in a corporation. One of the primary rights of shareholders is the ability to approve significant corporate actions, such as mergers, acquisitions, and amendments to the corporate charter—these can significantly affect their investment. Additionally, shareholders are entitled to receive dividends when declared by the board of directors, which represents a portion of the company's profits distributed to its owners. This combination of the right to approve fundamental changes to the corporation and to receive dividends embodies the essential interests of shareholders in protecting their investment and obtaining a return on it.

The other options describe rights that do not typically belong to shareholders. For instance, shareholders do not have the authority to make independent business decisions for the corporation, as this is reserved for the management team. Negotiating salaries of corporate officers is also outside the purview of shareholders; this responsibility lies with the board of directors. Lastly, while shareholders do have voting rights within the corporation, they do not vote on governmental regulations, which are outside the corporate framework and are determined by regulatory bodies and government authorities.