Minority shareholders are small shareholders

Many commercial companies in the quest to attract capital are in the process of listing on the stock exchanges. After receiving admission to trading, companies issue securities entitling to the possession of a share of the business, and offer them a wide range of potential investors. Stocks go into free circulation. Anyone can buy securities in the hope of making a profit. The minimum volume purchase often starts from one stock. Securities quotes are highly volatile, are subject to scrutiny from investors and speculators. Typically, these shares within a short period of time repeatedly change owners.

Public status

The Company placed securities on the stock market for free circulation, improve their reputation and attract investment. However, the public status contains a number of potential hazards. The presence of a large number of small owners creates the possibility of buying any major players a significant stake, allowing it to intervene in the management of the company.

Vote in the General meeting

Equity securities of enterprises can be divided into common and preferred. Each type has its advantages and disadvantages. Preference shares guarantee to holders of regular dividends in fixed amounts, but do not give the right to participate in the management of the firm. The holders of ordinary securities may vote in a General meeting, but their income from owning a share of the business depend entirely on the success of the business enterprise.

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The Degree of participation in the management of the company is inseparably linked with the existing number of shares. The package, which includes 25% of the voting securities, called blocking. He allows at the General meeting of shareholders to prevent the adoption of decisions on major issues related to the functioning of the enterprise. The owners of 2 % of the securities are entitled to make proposals for consideration and to nominate candidates to members of the Board of Directors.

Classification

Officially, the Russian legislation does not divide shareholders into groups in accordance with the size of the share of the business. However, the widely accepted concept of "majoritarian" and "minority" are used in the domestic business environment. These terms derive from the French words meaning "majority" and "minority". As you might guess, the minority shareholders is shareholders holding relatively small blocks of securities. The exact boundary separating the large and small owners of the company, no. We can confidently assert that the minority shareholders are members of the joint stock company does not have a blocking stake.

Threshold value

There is a criterion of holders of securities based on stock market liquidity. Purchase or sale of shares exceeding 5% of the free float shares, becoming the reason for excitement on the stock exchange and provokes perceptible fluctuations. In other words, such a large proportion of business is imperceptibly change owner. In accordance with this view, minority shareholders are the holders of shares not exceeding 5% of the total. Statistics say that among the small investors is extremely rare holders of more than 1% of the securities of any company.

Protection of minority shareholders ' rights

Lawmakers in many countries are trying to take into account the interests of the participants with a small number of stocks and deprived of the possibility to influence the process of corporate governance. In Russia also includes a number of measures aimed at protecting assets that are owned by minority shareholders. It is primarily restrictions on the actions of majorities. For example, the controlling may redeem shares of the minority shareholders only at a fair price. In addition, the adoption of some important company decisions require 75% of the votes. Access to information is one of the essential rights conferred on the minority shareholder. This means that the company must regularly provide it with reports on the state of financial Affairs.

Blackmail

The Holders of the controlling perfectly aware of what levers of influence a minority shareholder has. This is due to the right of the owner 1% of the shares to sue the company's management. Litigation can become a serious obstacle to the normal functioning of the enterprise. Some minorities take advantage of this situation and threatened a protracted legal dispute with the majority owner. The goal of small investors is to force the majority shareholder to buy their shares at a price much above market. This practice is called corporate blackmail. Of course, the laws regulating the relations between majorities and minorities, need to be improved.