General Rights Of Shareholders In Joint Stock Companies

The objectives of shareholders in joint stock companies are often to raise the value of their investments and contributions, and to achieve a good return on these investments, as well as to ensure that the management based on the company’s business works to maximize profits, while the company’s management seeks to enhance competitiveness and achieve high growth rates. The conflict between the objectives of each of the shareholders and those in charge of the company’s management leads to a waste of shareholders’ rights, and therefore the application of corporate governance rules will ensure the compatibility of each of the shareholders’ goals and the goals of the company’s management and enhance investors’ confidence in the efficiency of the system that protects their rights.

The disparity in the structure of shareholders, which consists of a different group of individuals and institutions with different interests, goals and capabilities, makes it difficult for the shareholders to assume the responsibility of managing the company’s activities, as this responsibility rests with both the Board of Directors and the team of managers. Hence, the rights of shareholders are based on a set of topics and basic tasks such as the election of members of the board of directors, the formation of the board of directors, the amendment of the company’s articles of association, the approval of extraordinary transactions, and other basic tasks determined by the companies’ law and its executive regulations and the company’s articles of association.

The good governance system ensures that shareholders exercise their basic rights with a great deal of justice and equality to ensure equal treatment for all shareholders, protection from violation of their rights, as well as protection of shareholders’ capital from misuse that may occur by company managers, board members or major shareholders

The company’s articles of association and its internal regulations must include the necessary procedures and controls to ensure that all shareholders exercise their rights in a manner that achieves justice and equality, and in a manner that does not conflict with the applicable laws and regulations and the decisions and instructions issued in this regard.

The general rights of shareholders are as follows:

  1. To record the value of the ownership interest in the company’s records.
  2. To dispose of shares from registration of ownership, transfer and/or transfer.
  3. To obtain the prescribed share in the dividends.
  4. To obtain a share of the company’s assets in the event of liquidation.
  5. To obtain data and information on the company’s activity and its operational and investment strategy in a regular and easy manner.
  6. To participate in the meetings of the general assembly of shareholders and voting on its decisions.
  7. To elect of the members of the board of directors.
  8. To monitor the performance of the company in general and the work of the Board of Directors in particular.
  9. To question the members of the company’s board of directors or the executive management and filing a liability claim, in case they fail to perform the tasks assigned to them.
  10. To approve of any sale, purchase or disposal in any way of the company’s assets if this operation amounts to 50% or more of the total value of the company’s assets.

The company must treat all shareholders who own the same type of shares equally and without any discrimination, and the company should not in any case withhold any of the general rights of shareholders from any class of shareholders, or set criteria that would distinguish between classes of shareholders to establish these rights, This is in a manner that does not harm the interests of the company or conflict with the law establishing the Capital Markets Authority and regulating securities activity and its executive regulations and the instructions and regulatory controls issued by it.

If you are looking for a Kuwaiti law firm that specializes in providing legal services to the securities, capital and stock market activities, you can count on us at Taqneen, Law Firm and Legal Consultations.

To book an appointment or request legal advice about the duties of securities companies in the optimal implementation of clients’ orders, we are pleased to receive your inquiries at (