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Every owner of a company is entitled to company ownership. Company ownership, also known as business ownership, refers to the legal and financial control over a business entity. This ownership gives the owner the right to make essential decisions, handle resources and take risks. The profits or losses of the businesses are often borne by the owners, especially in case of companies which do not offer limited liability protection.
In this blog post, we will shed some light on the legal rights of a company owner. If you’re planning to register a company in India, it is crucial that you understand all the rights you’ll have as a business owner.
A company owner is an individual having a financial stake in a business, and is responsible for the business’ operational and financial aspects. They may be the sole owners of the business or share ownership with others.
When a company owner shares ownership with others, they may be referred to as shareholders.
Every business owner in India is entitled to certain ownership rights. These rights have been discussed below:
When you own a sole proprietorship business, you can make changes to the company to make the business more profitable. While some changes will be supported by employees and customers, many others may be seen with a lack of confidence and receive lack of support initially.
Having a discussion about major changes in advance with your employees is always a smart idea. It gives them a sense of worth and shows that you value their opinions. You, as the business owner, have the authority to make adjustments in certain situations without first getting input from staff or clients.
You have the freedom to share your thoughts on a wide range of subjects as a business owner. Some of these perspectives might even influence your business culture. But you should be careful to avoid imposing your opinions on other workers or having discussions that might not be suitable for the office.
Talking about politics, sexual orientation, and religion at work is best avoided, especially if you are clueless about your employees' perspectives.
Although you are free to turn away consumers, take care that your behavior won't be interpreted as discriminatory in nature. Disregarding a customer's race, color, religion, national origin, disability, gender, or sex is prohibited. However, in most cases, you can decline service if there are safety issues, the customer is disruptive or unruly, they are not appropriately attired, or they are abusive.
When it comes to refusing service, make sure you and your staff are acting with the utmost discretion. If you want to win a lawsuit against your company, you need to have a strong argument for why your establishment isn't allowed to serve customers.
As a company owner of a private limited company or public limited company, you have the right to sue employees including directors, officers and other employees if they conduct wrongful acts, such as breaching duty, conducting frauds or any other illegal activities.
The initiation of proceedings can be decided by the board or liquidator. In some cases, on behalf of the company, the shareholders can bring a claim against the director. It is known as derivative action. For damages caused by actions and breach of duties or statutory standard of conduct, the director can be held accountable.
Personal consequences that can be faced by a director or any other company employee who has breached their duties include payment of damages or compensation, returning personal profits to the company, being issued an injunction to prevent further losses, facing criminal charges, losing personal assets among, to name a few.
In private limited companies, shareholders can usually transfer shares between themselves according to the company's Articles of Association (AOA). The transfer of shares is comparable to the transfer of any movable asset unless the company's articles of organization provide otherwise. The ownership rights and responsibilities are voluntarily transferred from one shareholder to another.
A share transfer form (Form SH-4) and the share certificate must be used in accordance with the Companies Act 2013, which governs the transfer of shares in private limited companies.
Every shareholder has voting rights allowing them to participate in corporate decision-making.
The voting powers conferred on shareholders gives them the right to appoint company’s directors through ordinary resolutions passed at shareholder meetings, make proposals for the company, dismiss existing directors from the Board, and vote for corporate structural changes like mergers and acquisitions, or winding up of the company.
AGM full form is Annual General Meeting. As the name suggests, it is an annual meeting. It is held for the company’s shareholders during which the company directors present the company's annual report and will comment on the performance of the company during the financial year.
Shareholders may elect new directors during the AGM to join the board of directors of the company, discuss remuneration of directors and ask questions regarding the future of the company. Through a show of hands or through a poll, the company’s members may vote.
Many other rights are conferred on company owners based on the Memorandum of Association and Articles of Association, and the type of business entity.
When an individual owns a company, they are granted various rights as a company owner. They can make crucial decisions for the company, sue employees for wrongdoing, transfer ownership rights to another individual, and the right to decline service, among other rights.
If you want to register a company in India, then it is mandatory to file an application with the Registrar of Companies (RoC). If you want company registration in a smooth and hassle-free manner, connect with our company incorporation consultants at Registrationwala.
We’ll file an application for company registration on your behalf, and also help you to prepare all the necessary documents and assist you in ensuring post-registration compliance.
Q1. What is a business owner of a sole proprietorship called?
A. The owner of a sole proprietorship is called a ‘sole proprietor’ or simply ‘proprietor’.
Q2. In which type of business, only the company owner makes business decisions?
A. Sole proprietorship is the type of business where the owner has complete control over the business and makes all decisions.
Q3. Is the company owner part of the board of directors in a pvt ltd co?
A. The company owner is not usually part of the board of directors in a pvt ltd co. The board consists of inside directors, who are generally company employees, and outside directors, who are only engaged with the company because of board membership.
Q4. Are shareholders owners of the company?
A. Yes, when a company has more than one company owner, then all the company owners are known as ‘share’ holders because they own shares of the company's stock.
Hey there, I'm Dushyant Sharma. With the extensive knowledge I've gained in past 8 years, I have been creating content on various subjects such as banking, insurance, telecom, and all the important registration and licensing processes for various companies. I'm here to help everyone with my expertise in these areas through my articles.
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