...main goals of financial mangers is shareholder wealth (Ross, Westerfield & Jaffe, 2010). Stakeholders are important but not the ultimate goal of a business. In order to maximize wealth potential for all invested the risk and reward should be carefully considered (Adams, 2008). One technique for doing this is capital budgeting because financial managers are able to make decisions with the proper information about risk and reward (Bloom & Van Reenee, 2010). This may also allow for stakeholder incentives and a share at the wealth. The question may come down to concern over cash flows or profits (Charron, 2007). Cash flows can be a goal of stakeholders where profits are a goal of stockholders. Both stakeholder goals and stockholder goals have benefits. An example, is when dealing with externalities such as pollution with cause maximizing the value of the firm to cause a misallocation of resources (Yoshimori, 1995). In today’s volatile markets and combined focus including stakeholders could be more conducive. The U.K. is similar to the U.S. with corporate governance goals of maximizing shareholder wealth (Yoshimori, 1995). But, Japan is an example of a country that has much broader goals. In Japan the concern is with the larger group of shareholders (Yoshimori, 1995). Japanese Ensures businesses are run in such a way that resources are used efficiently and customers suppliers and employees are taken care of as well as shareholders. Financial managers may have many...
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...Analysis of Shareholdings as at 31 March 2010 | | Authorised Share Capital | : RM100,000,000.00 | Issued and Paid-up Share Capital | : RM69,739,750.00 | Class of Shares | : Ordinary Shares of RM0.50 each | Voting Rights | : One vote per ordinary share | | | Shareholdings Distribution Size of Holdings | No. of Shareholders/ Depositors | (%) of Shareholders/ Depositors | No. of Share | (%) of Issued Capital | | | | | | 1 - 99 | 100 | 4.54 | 3,560 | 0.00 | 100 - 1,000 | 459 | 21.33 | 390,508 | 0.28 | 1,001 - 10,000 | 1,277 | 59.34 | 5,469,680 | 3.92 | 10.001 - 100,000 | 278 | 12.92 | 8,143,060 | 5.84 | 100,001 - 6,973,974 | 37 | 1.72 | 24,582,100 | 17.63 | 6,973,975 and above | 1 | 0.04 | 100,890,592 | 72.33 | Total | 2,152 | 100.00 | 139,479,500 | 100.00 | | | | | List of Top 30 Shareholders/Depositors | Holdings | No | Name | Normal | % | | | | | 1. | CCM Marketing Sdn Bhd | 100,890,592 | 72.33 | 2. | Employees Provident Fund Board | 5,835,800 | 4.18 | 3. | Amanahraya Trustees Berhad - Skim Amanah Saham Bumiputera | 4,545,300 | 3.26 | 4. | TM Asia Life Malaysia Berhad - As Beneficial Owner (PF) | 1,995,300 | 1.43 | 5. | CCM Marketing Sdn Bhd | 1,442,300 | 1.03 | 6. | Mayban Nominees (Tempatan) Sdn Bhd - Mayban Life Assurance Berhad (Par Fund) | 1,000,000 | 0.72 | 7. | Jerneh Insurance Bhd | 870,000 | 0.62 | 8. | Mayban Nominees (Tempatan) Sdn Bhd - Mayban Life Assurance Berhad...
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...DB1: Needs of the Stakeholder and Shareholder Obligations The discussion board question to be addressed in this paper is how can a company focus on the needs of its stakeholders without neglecting its shareholder obligations? Answering this question will require defining both stakeholders and shareholders, identifying the corporation’s responsibility to each and then stating the solution. Shareholder According to Lewis and Weber, a shareholder is “a person, group, or organization owning one or more shares of stock in a corporation; the legal owners of the business” (Lawrence & Webber, 2013, p. 585). These are also known as stockholders. The company and its managers are generally expected or obligated to produce as much value as possible for the company’s owners and investors. They are “to make the most money it can for shareholders who own stock in the company” (Lawrence and Webber, p. 12) Stakeholder A stakeholder is defined as “persons or groups that affect, or are affected by, an organization’s decisions, policies, and operations” (Lawrence and Webber, p. 584). Commonly included in such are employees, customers, suppliers, and the community, as well as shareholders and other investors. The idea is that there is a corporate social responsibility or obligation of the firm to serve all stakeholders interests which is practiced through “stakeholder management” (Mattingly, J. E., 2004). The Solution With the inclusion of shareholders in the definition of stakeholders...
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...Corporate managers and shareholders can sometimes find themselves in a conflict of interest. The goal of being a good manager is being able to spot these potential conflicts and to remedy the situation before a serious problem arises. The biggest conflict between managers and shareholders is going to be money. Here is the most common scenario. A corporation is profitable. In fact, the corporation is more profitable than expected. Therefore, the corporation has a cash surplus, if you will. Managers would want this money as a financial bonus and the shareholders would want this money as a stock dividend. What to do? What to do? Mangers will argue that without their leadership and managerial ability, the corporation would not have been as profitable. The shareholders will argue that without their money, the corporation would not have been able to invest in its growth, and therefore, would not have reached that level of prosperity. Who should get the money? Another situation arises when the managers are also shareholders. This may lead a particular manager to push the opposite way of his/her position. For example, if a shareholder manager would get more money from a stock dividend than from a bonus, this shareholder manager might vote in favor of a stock dividend, not because he/she believes that stockholders should be rewarded for their investment, but because it will mean more money for that particular manager. What if only that one manger is a stock holder? Before...
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...COMPANY LAW – MINORITY PROTECTION Question: Does company law protect shareholders? Discuss. Answer: Shareholders have ultimate control of a company. However the directors run the company's business and are responsible for its management. In general shareholders cannot interfere, although they can appoint and remove directors. Some constitutional matters, such as changes of the company's name, or to its Memorandum or Articles of Association, or to put it into liquidation (when solvent), require approval by special resolution, i.e. a 75% majority, which can therefore be blocked by shareholders with 25% or more. Other shareholders' resolutions require only a simple majority, i.e. more than 50% voting in favour. But what happens when clouds appear on the horizon, when the majority shareholder sees the company as his own to do with as he likes, or when he wants to eject a director who is also a shareholder? Surely, subject to having sufficient voting power to carry an ordinary or special resolution, the majority rules? Thus, it is the minority shareholders that are always in the conundrum. The Companies act 2006 has bestowed some forms of protection unto these minority shareholders. The statutory derivative action and the unfair prejudice remedy will be examined as to how readily available these remedies are to act as a check on directors and in some cases, majority shareholders in the execution of their duty. It is important to note that as at the time the financial crisis...
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... “A proper balance of the rights of majority and minority shareholders is essential for the smooth functioning of the company.”- Explain & Illustrate? 1. Introduction: The basic principal relating to the administration of the affairs of a company is that “the will of the majority is supreme”. The general rule is that the decisions of the majority shareholders in a company bind the minority. 1 In a world that recognizes ‘simple majority rules’, minority shareholders of companies are by default vulnerable to oppression, disregard and unfair treatment by majority shareholders who are in control of the company. Majority shareholders also have certain obligations to minority shareholders in their capacity of controlling the corporation. In certain cases this minority shareholder right can be exercised directly against a shareholder, without having to go against a corporation or through the derivatives action process.2 In such case a proper balance of the rights of majority and minority shareholders is essential for the smooth functioning of the company. The oppression of minority or mismanagement of a company by majority therefore calls for some remedial action. 3 Today’s minority shareholders come to the corporation with varied attitudes and agendas. Although their shareholder status results from a variety of circumstances, it is important in each case to make their relationship with the corporation and the other shareholders as productive as possible. This 1 2 Ashok, S. (2009-2010)...
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...The Head of New Product Development, David Perryman, has been set the objective of devising a project to increase the profitability of Scott Electronics PLS and to provide a greater dividend to shareholders. One reason to why shareholders may be pleased with the company’s financial performance in 2011 is due to the fact that the total dividends have increased from £1m in 2010 to £2m in 2011, which is shown in figure 3. The dividend per share measure the overall profit generated for each share in existence over a particular period. It simply looks at the dividend obtained from each share a shareholder owns. This is expressed in terms of the number of pence per share. This amount will normally be paid in two instalments. Using Appendix B I can calculate that the divined per share in 2010 was 20p and has increased by 100% to 40p in 2011. The dividend yield allows investors to see what percentage return they are getting from their investment. It also measures the proportion of earnings that are being retained by the business rather than distributes as dividends. Again using Appendix B I can calculate that the dividend yield in 2010 was 13.3% and in 2011 it increased by 50.3% to 20%. As both the dividend per share and dividend yield have increased shareholders will be making an increased profit which will not only encourage them to retain their profits back into the company, but it will also encourage them to continue supporting Scott Electronic Plc, and not look to buying shares in...
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...2010: Dividend per share = 20p, Dividend yield = 13.3%, Current ratio = 1.6:1 2011: Dividend per share = 40p, Dividend yield = 20%, Current ratio = 2.1:1 The shareholders of Scott Electronics might be pleased because the dividend per share has improved by 20p from 2010 and dividend yield also improved by 7% in a years time. This makes owning the shares more attractive and also it is likely to encourage the existing shareholders to retain their shares. Also, another reason could be the fact that the share price increased by 50p, form 1.50 to 2.00, this would also please shareholders because they can make profit from their shares and it can also attract new investors. Increase in operating profit and reserves will also please the shareholders, the operating profit increased by 2 million and reserves increased by a million. These facts indicate that business is doing well and has improved its performance over the year and also that it has saved money, which can be invested later on, in the long term. However, there might be possible reasons, which could explain why shareholders would not be pleased. One of the reasons is that the dividend yield is still below the industry average dividend yield, which is 25%. Shareholders might not like the fact that Scott Electronics dividend yield is lover than industry average and might sell their shares. Another reason might be the fact that Scott Electronics sold their head office for 2 million, so their fixed costs are likely to increase...
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...Shareholder Wealth Maximization Shareholder wealth maximization is the idea behind trying to drive a stock's price up. The shareholders are the actual owners of the company. By driving the price up the company becomes worth more than just the value of its assets. The sum becomes greater than the value of its parts. It becomes worth more to keep the business running than it would be to sell off the parts. Maximizing shareholder wealth is often the most important goal of a company; however, the bottom line is that profit is required to increase the dividends paid out with each common stock that constitutes shareholder wealth. Thus, an effective manager will be more concerned with the primary means of profit-making within a company. For example, Coca-Cola makes money by maintaining a powerful brand name and manufacturing an enjoyable consumer product. To maximize shareholder wealth, Coca-Cola must first maintain the status of its brand and product. Coca – Cola is one publicly traded corporation that you believe is maximizing shareholder wealth their vision is “maximizing return to shareowner being mindful of our overall responsibilities.” The company’s major goal is to further increase stake in global beverage market. Coca cola works to use their assets to become an even stronger and more competitive company for is shareowners benefit. Provide the public with beverages that satiates their consumers’ wants and needs. Partner with companies where loyalty is and maximize shareholders...
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...importance of the ‘Firms’ which are both Stakeholders and Shareholders but the Fact is local and big businesses are focusing more on the consumer, ‘shareholder’ rather than the Stakeholder. The wants and needs of the Shareholder come first. Companies are more focused on customer satisfaction but there is some that put their staff before customers such as ‘John Lewis’. ‘Short term pursuit of gain is rarely likely to benefit a business in the long run anyway’. The point being made is companies want to maximise the values of their Shareholders but don’t want to put Stakeholders at risk as they wish to make the business a lasting one and the employees are important to max a long-term shareholder as quoted ‘If retaining talented staff is a managers’ hardest task, Devotion to employees may be the best way to maximise long-term shareholder value. I agree with the statement on the maximisation of the shareholders but I also think it is important to split it equally between the stakeholders and shareholders. They both play a vital part internally and externally. But with Stakeholders Plans and adjustments must be made for a business to adjust and thrive so maybe it is best to put the stakeholders before the shareholder. It has to be balance as the Stakeholders wish to keep in the shareholders happy as they are the Managers, Owners, Employees and Customers who will keep the company rolling forward. I think without the shareholders the stakeholders are nothing because if the businesses plan...
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...THE COMPANIES ACT, 2063 (2006) Date of Authentication: 2063.7.17.6 7 kartik 2063 ( 3 November 2006) 1. The Act Amending Some Nepal Acts, 2064 2064.5.9 (26 August 2007) ACT NO. 18 OF THE YEAR 2063 (2006) An Act made to amend and consolidate the law relating to companies Preamble: Whereas, it is expedient to amend and consolidate the law relating to companies in order to bring about dynamism in the economic development of the country by promoting investment in the industry, trade and business sectors through economic liberalization and make the incorporation, operation and administration of companies much easier, simpler and more transparent; Now, therefore, be it enacted by the House of Representatives in the First Year of the issuance of the Proclamation of the House of Representatives, 2063 (2006). Chapter 1 PRELIMINARY 1. Short title and commencement: (1) This act may be called as the “Companies Act, 2063(2006)”. (2) This Act shall be deemed to have come into force on 20 Ashwin 2063 (6 October 2006). 2. Definitions: In this Act, unless the subject or the context otherwise requires, (a) “Company” means a company incorporated under this Act. 1 (b) “Private company” means a private company incorporated under this Act. (c) “Public company” means a company other than a private company. (d) “Holding company” means a company-having control over a subsidiary company. (e) “Subsidiary company” means a company...
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...increased functionality and fun. Therefore, a large company like LG Electronics can have a great impact on the society and has many stakeholders. The internal ones include directors/managers, employees and shareholders. Suppliers, customers, NGO/ International organizations, community and local government are external stakeholders. Directors/managers Directors and managers are the ones that run the business. They aim to maximize their own benefits, such as higher salary and annual bonus. Thus, they try their best to improve the corporate values. Shareholders By the end of 2012, the number of shareholders of LG Electronics was 201,161. Shareholders are powerful stakeholders because they invest their money into the business. As the owners of the business, they aim to maximize the profit. They are hoping for a disclosure of transparent management information as well as more dividends. It is stated in the mission statement that the company wants to deliver innovative products. Without re-investing profit into the business, new products may not be invented. However, shareholders tend to share the profit immediately, which conflicts with the mission statement. LG Electronics communicate with the shareholders through different ways, including holding a general shareholders’ meeting, having a performance presentation and publishing a business report. Employees Another important internal stakeholder group is employees. As of December 31, 2012, LG Electronics has 86,697 employees...
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...1 THE VEGA FOOD COMPANY In February 2007, Francisco Valle, Jr., president of Industrias La Vega, organized the first family council meeting in the owning family’s history to address problems he was having with his youngest sister, Mari, a shareholder in the company. He felt that the problems were not of his making and were interfering with his management of the company. Francisco, 45, had worked closely with his father, Francisco Sr., since 1986 and had become president of the company in March 2004, when his 72-year-old father was killed in an automobile accident. Industrias La Vega was a Spanish meat-processing business that produced hams, sausages, and other delicacies for domestic and export markets. The $104.8-million-a-year business was demanding, of course, but Francisco Jr. felt most challenged by the family conflicts that often overwhelmed him. The ownership structure of Industrias La Vega had been updated just months before the tragic accident involving Francisco Sr. At the request of Francisco Jr., who was concerned about the possible loss of control of the enterprise he had co-managed with his father for years, Francisco Sr. and his attorneys had created two classes of stock. The voting A shares did not pay dividends. The nonvoting but dividend-bearing B shares had a par value 10 times higher than that of the A shares. Except for brief stints, none of the Valle daughters had worked in the business prior to their father’s death. Ana, the second eldest daughter, was...
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...Business Society and Ethics 2/4/15 Based on the analysis required for this assignment, we are told to assume that Jack Ma has acquired the West Texas Fertilizer plant. From prior knowledge, I know that Jack Ma is a staunch “advocate for corporate social responsibility” and is a major advocate for improving the “environment”. I have also learned that Jack Ma is an individual who pays attention to social issues and works to ensure that some sort of change is brought forth to improve these issues. Based on the background information given about Jack Ma, I can assume that if Ma acquired the West Texas Fertilizer plant he would conclude that the fire in which took the lives of 35 innocent individuals is due to the irresponsible actions of the company owner. He would conclude that many alternate steps could have been taken to ensure that the fire would not occur. Ma would not only take steps to improve the infrastructure of the West Texas Fertilizer plant but would also improve the social structure of the plant because he is not concerned about maximizing profit for the benefit of the corporation but he is more concerned with making “healthy money, enabling people to enjoy their lives”. The first step that Ma would take is to “reboot and revisit the initial dream the company had while questioning what is the sole purpose of building the business”. He would then try to better educate individuals on issues relating to the plant. These educational forums may include...
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...Business Law & Bankruptcy Assignment #4 Aquaman is president of a marine research company called Underwater Leagues, Inc. When his company conceived a dramatic new invention, he held off announcing the discovery until he bought 50,000 shares of Underwater Leagues at $10 per share. After the announcement, the share price skyrocketed to $50 per share. The shareholders of Underwater Leagues, Inc. bring a derivative action suit against Aquaman claiming breach of fiduciary duty for violating 17 C.F.R. §240.10b-5 of the Securities and Exchange Commission Act of 1934 by purchasing stock in his company on the basis of information that was not available to the public. The shareholders seek remedy for their claim. If a president of a corporation purchases stock in his company on the basis of non-public information that he deliberately withheld from the public, is he in violation of 17 C.F.R. §240.10b-5 of the Securities and Exchange Commission Act of 1934, and will he be held liable to shareholders for damages? In Robert Kemp v. Universal American Financial Corporation, Fed. Sec. L. Rep. P94,147 (S.D.N.Y. 2007) an action is brought on behalf of those who purchased the securities of Universal American Financial Corporation (Universal) during the Class Period. Plaintiffs allege that Universal, a health and life insurance company, issued false and misleading statements regarding the financial performance of its senior health care segment, and allowed insiders to sell their privately...
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