Shareholders are the true owners of the company, so they have lots of rights. For a start, in theory they appoint both the board of directors and the auditors. In practice the directors do both and shareholders have all too often supinely agreed to everything done in their name. Even great institutional holders who know the law and accounting principles and are sophisticated investors have been lax in exerting their power and have generally more often sold the shares than spoken up or done anything for the business. This has been changing: some institutions are using their influence and it is becoming less easy for the board to dismiss awkward questions at the annual meeting, but still too many private individuals consider any questioning of the board as an unseemly delay of their free drinks.
As owners, shareholders are entitled to be given a wide range of information, and to participate in the company’s success.
The information the owners must have includes regular financial facts. Every year the company must produce an account of its finances (the phrasing in law is a little more complicated but that is what the rules amount to) and this must be sent to all registered shareholders.
Shareholders must also have notice of important events affecting the business. That includes details of major acquisitions and disposals, demergers and reorganizations.