What are the disadvantages of shareholders?
I need to answer this question for accounting, business studies. I just need to know a few disadvantages that a sole trader, partner or limited company would come across if they were too sell shares of their company. Thanks for any help
Corporations - 1 Answers
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Answer 1 :
Shareholders have the Voting right for the direction the company goes in - hence this is the biggest disadvantage - as the shareholder may know very little or nothing about the business and then they have a right to vote on the direction of the business thus the original owners loosing control? You have to organise an AGM for voting making it time consuming etc if there are too many shareholders? Shareholders will then split the profits with the original owners - so could be a disadvantage especially if the managing shareholders (original owners) feel that profits need to remain in the company for cashflow, expansion etc? Hope this helps?
