RIGHTS OF EQUITY HOLDERS
An equity entitles its owner to get a share of the yearly net profit of a company. Dividends are paid to equity holders when the company decides to distribute dividends at its general assembly. A dividend is one of the most important financial benefits of the equity holder, representing an acquired right, but may be limited with certain terms.
It entitles a priority to the equity holder to participate in the capital increase of the company through a rights issue. The subscription period to exercise the pre-emptive right is 15 to 60 days. Rights coupons can be traded on the Rights Coupons Market.
Right to Share in Liquidation Balance:
If there remains any balance after the company’s liquidation, the equity holder participates in such balance in proportion to his shareholding interest.
Right to Participate in the Management of a Company:
The equity holder is entitled to attend the general assembly, elect, and be elected a member of the board of directors.
Each equity vests minimum one voting right in its holder. Yet, the number of voting rights which an equity will vest in its holder may be determined by the articles of association, and the voting rights attached to a single share may be increased.
Right to Receive Information:
It is essential that an investor in an equity has access to information related to the company. The equity holder’s right to receive information cannot be prevented or limited with the articles of association or a decision of the company. Publicly-held companies are obligated to disclose any important information/news related to the company’s condition in the most practical way. Companies also disclose their independently-audited financial statements on a quarterly basis.