Many people know at least the general idea of how the stock market works, with the purchase of stocks being equivalent to purchasing partial ownership in a company. However, there is less widespread understanding of the rights that commonly accompany one’s role as a shareholder and how those rights play out in reality. In order to help us address this question, we turned to work by Juan Monteverde, a leading securities attorney based in New York City. Read on for an overview of shareholder rights and a look at the career the attorney has built in the pursuit of protecting those rights.
Before diving into the overview of shareholder rights, let’s first take a brief look at the work in which the attorney is typically involved. As a securities attorney, Juan Monteverde often takes on cases where he is focused on protecting shareholders from potential transgressions by corporations. Much of the time, his efforts are focused on cases involving mergers and acquisitions. During these cases, the attorney strives to attain a favorable outcome for the shareholders he represents, which includes ensuring all material information is disclosed and a fair price is received.
The attorney’s firm, Monteverde & Associates, is a national class action law firm. It works primarily on cases involving corporate misconduct in one way or another, which can include instances of corporate fraud.. While working on these cases, the firm seeks to recover damages that have been incurred as a result of the above activities. As a top-level firm in its field, it has handled a wide range of cases that have progressed through many different trial and appellate levels, including the U.S. Supreme Court. As a result, the firm’s experience provides a wealth of knowledge pertaining to issues of shareholder rights.
While these rights can sometimes vary by jurisdiction, one of the most fundamental examples that is quite widespread is the right to oversight. Practically, this often manifests in the right of shareholders to inspect company documents. This can be done with the proper purpose to investigate potential claims prior to initiating suit. This type of oversight can also serve to verify financial records and make sure that the accounting being presented to shareholders is consistent with the records that are contained in official company ledgers.
One of the reasons the right to oversight is important is because shareholders typically also have a right to share in profits attained by the company. This is typically done when a company’s Board of Directors declares a dividend to common stock shareholders. When this action is undertaken, shareholders have a right to ensure they are receiving the amount to which they are entitled to receive. This can also be relevant in a situation in which a company is forced to liquidate its assets. While these companies are typically required to first pay off debtors in the case of bankruptcy, shareholders are still entitled to some portion of earnings after the question of outstanding debt has been settled.
Beyond simple oversight, shareholders are typically entitled to vote on a range of company actions. While many shareholders own only a small percentage of a company’s overall stock, they are still entitled to having their vote weighted in proportion to the amount of stock that they own. These votes can be a key part of shaping company policy and are one of the key rights given to shareholders. In fact, this idea is fundamental to the way in which stock ownership works, since the purchase of a company’s stock is tantamount to purchasing an ownership stake in the company itself.
One of the most important ways in which this idea plays out is through the ability of shareholders to affect company management. While not all decisions are put up for a vote, shareholders typically have a direct say in who sits on the board of directors and who is placed in high-level leadership roles. Through this type of voting, shareholders are able to collectively place people in power who are likely to act in a manner that aligns with their values. If shareholders feel that someone in the company is not acting how they’d like, they have the ability to remove them from power and replace them with somebody else.
The right to legal action is another common right held by shareholders and it is heavily tied to the work of Juan Monteverde. Though relationships between shareholders and companies are often largely harmonious, there are times in which legal action is needed if shareholders feel they have been wronged. In these instances, a suit can be brought by individual shareholders or as part of a class action suit. Sometimes the suit can be directed at the company itself, or other times it can be directed to management of the company, like an executive officer, or third parties, like investment bankers or auditors.
The attorney has contributed extensively to the public understanding of cases such as these through his authorship of legislative articles. Much of his work in this area concerns issues involving mergers and acquisitions or executive compensation. He also often speaks at legal conferences to share information on this issue. In this capacity, he has spoken at ABA, PLI, and ACI. Through this work, he has helped expand the general understanding of merger litigation and has helped further cement the understanding of shareholder rights, especially in cases of corporate misconduct.
While an understanding of the general workings of the stock market is fairly widespread, many people do not have a full grasp of the rights that are often afforded to shareholders when they purchase stock in a company. This understanding is important as it can allow shareholders to understand when their rights are not being respected and even when legal action may be necessary. Work by Juan Monteverde and others in the field of securities law has helped greatly in raising the general understanding of these issues. Look to the above overview and further work by the attorney to more fully comprehend what rights you have as a shareholder.