Company belongs to whom?

It depends on the perception of the indivisual.From the point of ownership the Co. definitely belongs to the shareholders.Simply because they eat up the profits and returns.Similiarly it works on behalf of the shareholders who sign the memorandum and articles.

Thanks

Defilitely the Company belongs to the shareholders because the Directors work for the benifit of shareholders it may be short term in the form of dividend or it may also be long term in the form of wealth maximisation. As you said that there are various restrictions on the directors so how can they make profit of the company for themself.

Secondly you said that the shareholders does not having any knowledge of the composition of the board of the company and its working and they usually sell out their holding. So dear friend it is the right of the shareholder to know about the company he is supposed to know all that. Company also provide them all information in its Annual Report. As far as selling of shares point is concerned my dear friend ownership may be transferred.

Major decisions also can not take place without the concent of the Shareholders.

Thus it is quite clear that the Shareholders are the real owner of the Company.

In case of a firm, partners do not sell there share even if the firm is suffering losses, they r with the co. through out its life. Whereas shareholder r just speculators. They do not support at times of crisis. 

The question is not abt ownership but abt responsiblity & belongingness, just like partners.

Yes, parterners are jointly and severally liable for the liability of firm as they carry business of the firm for their own benifit. But the same is not in the case of company. Here the directors carry the business of the company for the benefit of shareholders with the money of shareholders so how the shareholders can be held responsible for the misconducts of the directors. Further, as far as selling is concern when they consider that their money are not properly dealt with or they are not getting proper returns or business of the company are not properly conducted generally, they use to sell their holding. But at last shareholders are the ultimate owners of the company.

Sirji it's not about ownership, i hve said it again & again. you r not understanding the the probelm.

Directors r there in the co, running theb/s. But there motto is to make personal profits, they do not act as sincerely and honestly as a proprietor/partner.

Every party is using the company for making own monies and cover themsevles behind the fictional serperate legal entity of the co.

Boss this depends upon how you understand it.I mean that  -

1. Logically equity shareholders are the owners of the Co.

2.Practically, what you said is correct in few scenerios.(but that is not we find in the books).

Dear Mr. Pulkit

As u described the above mentioned category and syas who will be responsible on behalf of the company?

I think, everyone will be responsible for their functions and duties whether he is auditor or dirctor on behalf of the company.

Regards  

No my dear, what you said is not corret, it happens in some cases as 'Satyam'. Directors can not take enven a Rupee from the Company. The position of directors are fiduciary. They have to disclose each and everything regarding their activities and plans to the shareholders. However, the cases where the directors misuses their position and hide behind the corporate veil. The shell of corporate veil is used to lift up and directors become personally liable for their misconduct.

BUT in most cases (for small companies atleast) the managing director owns about 80% of shares and the other director owns 10% of the shares isnt it ?

SO ultimately it is the directors who own the company right ?

Dear Shanti,

I dont want to disclose the name of any company but you should see the shareholding of most of the biggest companies of India, it is only aroud 7-8 percent.

Also, if you are saying that the directors hold 70 to 80 % shares and thereby becomes the owner. In that case also the ownership is in the hands of shareholders as they are owner as they are holder of 80 % shares. and it is said by you not me in your above reply.

Yes correct Sir.. In this case the  Directors become share holders.

So now you all are agree that the company belongs to Shreholders???  or it need further clarifications.

Yes Sir,

 Company truly belongs to shareholders and directors if they are majority shareholders can be owners of the company too. Thanks