Shareholders & Stakehoders

8/13/2019 Shareholders & Stakehoders

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Shareholders &Stakehoders

Arif Har tono, SE. MHRM. PhD .

Learning Objectives

To understand the difference betweenshareholders & stakeholdersTo be aware of the various differentstakeholders groupTo have an overview of the way thatshareholders & stakeholders are provided forin various CG codes & guidelinesTo understand the roles that shareholders &stakeholders can play in companies & thedevelopment of CG


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Stakeholders & Shareholders

Stakeholder: any individual orgrouined p on which the activities ofthe company have an impact(including shareholder...)Shareholders: an individual, firm orother entity that own shares in acompany

Stakeholders & Shareholders

Shareholders being distinct from otherstakeholders group:

Shareholders invest their money to providerisk capital for the companyIn many jurisdictions, shareholders rightsare enshrined in law


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Shareholders & Responsibility

Shareholders are not involved in the operationof the corporation, except through their electionof the BODOwn stocks but have no access to assetsThe real value of stock: dividend payment,share resell, potential asset value at thedissolution of the corporationThe rights include: receiving information,electing board members, submitting & voting onproposal policy

Shareholders & ResponsibilityReceiving Information:

Shareholders expect that they will receiveaccurate and representative informationregarding the corporations policies and

particularly its financial situation.How shareholders do communication?These communications are offered toshareholders by way of the annual shareholdermeeting as well as through reports that arereleased on annual and quarterly schedules.Shareholders must also be assured that they arereceiving all important information related to issuesthat arise between the releases of reports.


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Shareholders & ResponsibilityElecting Board Members

Shareholders vote to elect board members whothey believe will take good care of theirinvestment in the corporation.In most situations the shareholders vote onpotential candidates who were nominated andscreened by the sitting board members.It is also possible for shareholders to nominatepotential directors themselves, but thesenominees will have to be screened by the boardbefore being included on the ballot.


Problems that may arise in electingthe Board:

Some problems that can arise andcreate an insufficient system in terms ofelecting appropriate representationinclude inadequate information aboutprospective directors and an inability tonominate candidates.


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Proposal Submission and VotingThroughout the fiscal year, shareholdersare able to submit proposals to help directthe corporation in the direction that theydeem fit.Several protocols are consistently required

for shareholder proposals. Withoutadherence to these protocols, theproposals will not be considered by theboard.


The rule shareholder proposal submission:The shareholder must own at least 1% of thecompanys stock, have owned it for at leastone year, and must commit to continualownership through the voting date.The shareholder may not submit more thanone proposal per voting period.The proposal may not be more than 500words in length and must not relate to anyprohibited proposal content.


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Shareholders Meeting

Shareholder meetings are held toprovide shareholders with a forum inwhich to gain information and cast votes.

Although designed to ensure thatinvestors are able to actively protect theirinvestments, shareholder meetings canbe largely unproductive when not runeffectively.

BODs Duties

To protect shareholder interests, the board is assigned twofiduciary duties:

Duty of loyaltyIn keeping with the duty of loyalty, the board and its members

are required to act on behalf of shareholder and companyinterests, rather than their own.Duty of careThis duty requires that company directors make reasonableefforts to care for the companys interests.

Board members who do not meet either of these duties aresubject to reprisal through shareholder petition fordismissal, class action suits, or legal injunction.


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Shareholders in Indonesia

The rule of share holders in theIndonesian companies can be found inpage 21 of Pedoman Umum GCGIndonesia

Stakeholder Groups

Employees: the company provides livelihoodProviders of creditSuppliers:

Provide goods or servicesContinuity of the company suistanability of thesuppliers

CustomersBuy productsSocial, environmental, & ethical aspect of corporatebehavior


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Stakeholder GroupsLocal communities

Corporate employees many local peopleUnemployment social impacts

Environmental groupsProtection to environment (e.g. ollution)

GovernmentTo ensure that companies comply to

socially responsibility, ethical &environmental considerationsEmployment, monetery, market supply...Fiscal

Role of Stakeholders &Shareholders

Depend on national laws, customs, &individual companys approachUK & US: the emphasis is on therelationship between the shareholders(owners) & the directors (managers)German & French: partnership betweencapital & labor, provide for employeerepresentation at board level, bank(providers of finance) may alsorepresented on the supervisory board.


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Stakeholders in Indonesia

The rule of stakeholders in theIndonesian companies can be found inpage 23 of Pedoman Umum GCGIndonesia

Conclusions

Companies should take account of theviews of various stakeholders in additionto those of shareholdersMaintaining & enhancing shareholdervalue should consider stakeholdersinterestsInteraction among all of interestssuitanability in the long-term operations.

Documents

Shareholders & Stakehoders