Introduction
Stockholder rights, corporate governance, and consumer protection are different concepts that may be related in one way or the other in a while exploring the operation of companies or corporations in a given business environment. In that regard, it is worth establishing their distinct features by describing and analyzing each of these concepts.
Description and Analysis of Stockholder Rights
Stockholders have several legal rights even though such rights are associated with different levels of significance. In the contemporary corporate world involving business corporates, the key groups of stockholders are shareholders. Trade creditors, debt holders, customers, suppliers and the communities that are affected in one way or the other based on the activities and operations of a given corporation. Stockholders and their various rights play a critical role in influencing the direction taken by some of the contemporary interests held by the corporate governance system. In large companies and corporations where the separation of management and ownership exists, stockholders usually have no significant controlling role to play. Almost every corporation usually has and operates within a hierarchy that is related to three major securities namely common stock, preferred stock, and bonds. The priority accorded to each of these securities involves the issue of preferred stockholders as well as bondholder having a significant role to play when it comes to decision-making processes. The importance of this hierarchy is mostly realized and acknowledged when a corporation is struggling with issues of bankruptcy as well as the various categories of security grants and their associated rights (Bierman, 2015).
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For instance, the preferred stockholders in most corporations always have the rights to receive dividends before any member of the common stockholders in considered. In such cases, the common stockholders are only given voting rights whereas bondholders are usually accorded the rights to that are outlined in relation to the nature of their bond adventure. The fundamental principle is that common stockholders often take greater risks which imply that they stand better chances of making significant returns on their investments upon the success of the companies in which they invest. Over the last couple of years, companies have been able to realize that their success is not just dependent on the nature of management that they may be having. Instead, it is clear to them that stockholders have a significant role to play in determining the level of success achieved by such companies. In that way, companies have been forced to need to clarify and protect stockholder rights as one of their priorities. Companies have even gone to the extent of putting in place some mechanisms that are able to protect the rights of their stockholders effectively. The kind of mechanisms adopted by various contemporary companies to protect the rights of their shareholders has a way of being incorporated into their structure of governance. This incorporation comprises regulations procedures and policies that influence the manner in which the management of a company or a corporation is expected to deal with issues concerning their various stockholders. Moreover, such regulations and policies provide for ways and remedies that may be used in addressing any violation of the rights belonging to the stockholders (McGuire, 2014).
Stockholders may be regarded as individuals who are involved in collective ownership of a company. In that respect, stockholders are expected to be entitled to several distinct rights. Principle among such rights is that receiving information regarding the operation of the company in an accurate and timely manner. Furthermore, stockholders have a right to be adequately informed concerning the measures were taken by a company to ensure prudent utilization of their investment funds and resources. Such information may be provided regarding timely submission of accurate quarterly and annual reports detailing the operations and financial status of the company as a way of expressing accountability between the management and stockholders. Another way of retaining the confidence of stockholders who chose to make investments in different companies is by holding forums and having engagements between them and the management. During such engagements, the management of a company can communicate to the stockholders the details of the company's operations and activities covering a particular period and well as the plans and strategies for the future. At any point along the management and operation of a company, the stockholder is always entitled to seek any additional information from the company's management regarding different aspects in which the company engages such as business. Stockholder also has a right to take part in the decision-making process and influences the steps and the direction taken by a company by weighing different significant matters concerning the best interest of that particular corporation (Bierman, 2015).
Description and Analysis of Corporate Governance
Corporate governance entails relations, processes, and systems through which corporations are directed, controlled and managed. Principles and structures of governance in corporations play a considerable role in the identification and distribution of various rights, roles and responsibilities among a wide variety of participants. Such participants may include the management, board of directors, regulators, auditors, creditors, and different categories of stockholders among others. It is also important to note that corporate governance takes important consideration of the procedures and rules that are followed when it comes to arriving at various decisions involving corporate affairs. Corporate governance represents the processes and operations through which the aims and objectives of a corporation are determined and pursued concerning a regulatory, social, and business environments. In this case, the mechanisms and systems of governance can involve policies, actions, and decisions of the management as well as the manner in which the interests of various stockholders are affected. This is because the governance structures and practices of a corporation are typically influenced and affected through the various attempts by the management to alight the interests of such a corporation with those of its stockholders. To that extent, the corporate world has been experiencing a steady increase in the number of investors and other stockholders who are over the last couple of years. The board of directors in any corporation forms the most fundamental part of the stockholders whose decisions and actions have a major potential of influencing the style and outcomes of corporate governance (McGuire, 2014).
In most cases, the directors of corporations come into being through appointment by other board members or election by different stockholders. Upon their election or appointment, the board of directed operating within the structure of a system of corporate governance are expected normally expected to represent and protect the best interest of the corporation in which they serve. There are certain instances where the corporate obligations of the board always exceed the financial optimization foreseen and planned by the management. However, when the resolutions made by the stockholders, there is usually a call to observe certain environmental or social concerns as priorities. Boards of directors incorporate often comprise internal and external members. The internal members are usually regarded as major stockholders who may include executives and founders. Within a system of corporate governance, external directors rarely share ties with the internal directors but are mostly appointed based on their experience in directing or managing large corporations. Corporate governance has a crucial role to play in the facilitation of a practical, prudent and entrepreneurial management that is capable of delivering long-term achievements to a corporation. Corporate governance represents a system through which the affairs of companies and corporations are controlled and directed based on the interests of various stockholders. The intention of corporate governance is typically associated with the desire to raise the level of accountability as well as to avoid any massive disaster that has the potential of occurring (McGuire, 2014).
Description and Analysis of Consumer Protection
Consumer protection is a concept that is operational in regulated jurisdictions with the objective of ensuring that the rights of consumers are adequately protected including fair trade, fair competition as well as the provision of accurate information about various goods and services in the market. The laws, policies, and regulations put in place by governments in different countries play a crucial role in ensuring that consumers are shielded against unscrupulous business people whose products or services may be harmful to the consumers in one way or the other. The basis of the operation concept of consumer protection is the consumer rights and the idea of an inherent right to a certain level of safety and health measures accorded to humans. Consumer protection may be effected through the enforcement of the safety requirements and standards associated with product or services as well as dissemination of accurate information that is important for a consumer to make informed decisions and choices. The relevant governmental and non-governmental authorities may achieve another way through consumer protection is by putting in place effective mechanisms and policies that prevent deceptive marketing and sale of substandard products. In some cases, consumers are involved in seeking remedy, restitution, and redress for their frustration or dissatisfaction whenever they occur (Merrilees & Cotman, 2016).
There are countries where the concept of consumer protection involves initiatives, actions, and campaigns carried out by specific social movements with the aim of protecting consumers from sub-standard goods and services. Consumers' consciousness is critical in determining the level of effectiveness associated with consumerism. Some quarters have argued that the idea of consumer protection should also involve the input from consumers themselves. In this case, consumers have to play an active role in identifying their rights as well as protecting them. Modern developments in the technological world have been able to make a significant impact on the availability, safety, and quality of the products being presented to consumers. Exploitation of consumers follows various forms including poor quality, adulteration of products, deceptive advertisements, deficient services, unreasonable prices, dubious purchasing plans, and hazardous products among many others. Consumer protection could also be viewed from the perspective of businessmen. In this situation, the consumer protection measures such as those ensuring that unscrupulous people do not take advantage and supply standards products ensure the protection of those genuine business people who are committed to supplying products that meet the required standards (Merrilees & Cotman, 2016).
Conclusion
Based on the analysis and descriptions done, it is clear that stockholders' rights are essential since companies have been forced to put in place some mechanisms that are able to protect the rights of their stockholders effectively. Such mechanisms adopted by various contemporary companies to protect the rights of their shareholders have a way of being incorporated into their structure of governance. Additionally, corporate governance has a crucial role to play in the facilitation of a practical, prudent and entrepreneurial management that is capable of delivering long-term achievements to a corporation. It is also worth noting that the concept of consumer protection involves initiatives, actions, and campaigns carried out by specific social movements with the aim of protecting consumers from sub-standard goods and services.
References
Merrilees, B., & Cotman, N. (2016). An Economic Analysis of Consumer Protection Law.
The Australian Quarterly , 48 (1), 79. doi: 10.2307/20634831
Bierman, H. (2015). Stockholder Rights and Carl Icahn. SSRN Electronic Journal . doi:
10.2139/ssrn.905915
McGuire, J. (2014). Corporate Governance and Growth Potential: an empirical analysis.
Corporate Governance , 8 (1), 32-42. doi: 10.1111/1467-8683.00178
