Company Shareholders’ Rights And Remedies According To Companies Act
According to the Companies Act (Cap 50), every member and shareholder of a company is entitled to certain rights and remedies for as long as their membership or shares to the said company are legally existent.
However, the rights and remedies enjoyed by members and shareholders are different, because the latter are not considered members of a company. Likewise, shareholders are also not subject to the liabilities that members have.
Who then becomes a member of a company?
According to the Companies Act, a person who fulfills these two is a member: first, if that person is a subscriber to the memorandum of the company; second, if the person agrees to become a member, and consequently, his or her name appears in the company’s official register of members.
What are the rights of company members?
Members have to ensure that the memorandum and articles of the company are followed and that they need to restrain from committing illegal acts.
Members have access to the company’s records and finances. These include the company’s register of members, register of directors, secretaries, managers, and auditors; register of directors’ shareholding; register of substantial shareholders; register of debenture holders; and register of charges. If a member desires to know more about the company’s financial standing, he or she is entitled to a free copy of the last audited profit and loss account as well as balance sheets. A member is also entitled to a copy of the auditor’s and directors’ reports.
Members can also circulate resolutions and call for general meetings. They can attend and vote at these general meetings.
They also have the right to fair treatment and relief under the Companies Act Section 216. In addition, members can apply for derivative actions under the same law to address wrongs against the company.