“A company is the property of the shareholders is an exploded myth.

The company is a form of business organization in which the funds of a large number
of investors are managed by a few persons for the earning profits which are shared by all the
investors. According to the companies Act 1956 states that a company means, “a company
formed and registered under this act or an existing company.”1

A shareholder is an individual or company that legally owns one or more shares of

stock in a joint stock company. A company's shareholders collectively own that company.
Thus, such companies strive to enhance shareholder value. Stockholders are granted special
privileges depending on the class of stock, including the right to vote on matters such as
elections to the board of directors, the right to propose shareholder resolutions, the right to
share in distributions of the company's income, the right to purchase new shares issued by the
company, and the right to a company's assets during a liquidation of the company.

From the above definitions of the company and the shareholder, we can argue about
the fact that, the company is the property of the shareholders, from different viewpoints.
Such as:

1. The shareholders have the right to vote (for common stock holders). Any major
decision taken for the company is decided by the votes of the shareholders of that
company. In this sense the company is the property of the shareholders.

2. Shareholders have the right of selling their shares of a company. It means they
have the right to sell their property for personal gains.

3. If a person own stock of a company, he owns a stake in that company. If he owns

the most stock, he is the majority shareholder and he has the most authority in that
company. So where he has his rights, becomes his property.

4. The corporation has its own independent existence and life. Some corporate
powers are expressed while others are implied by operation of law.
That said shareholders have rights to seek to dissolve the corporation, end the
corporation and seek approval to sell the corporation or corporate property.

1
Section 3(1)(i) of the Companies Act, 1956
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 5. As long as the corporate survive, provide services to its shareholders. In this sense
it is a property for them.

Besides the points discussed above, there are also some arguments which tries to
imply the fact that the company is not the property of the shareholders. Those are:

1. The company is not only property of the shareholders but also of the society as
well. Because if the company is assumed to be property of shareholders then the
company might go for some actions (which are not good for society) to maximize
the shareholders wealth.

2. The company is run by the Directors on the Board, most of whom possess sizable
shareholding, and an ordinary shareholder's voice is seldom heard.
3. Shareholders don’t have any direct control over the company. In this sense it is not
their property.
4. Shares of ownership are personal property of their owners to intangible corporate
rights.
5. Stockholder’s rights to a company's assets are subordinate to the rights of the
company's creditors. This means that stockholders typically receive nothing if a
company is liquidated after bankruptcy.
6. Shareholders are considered by some to be a partial subset of stakeholders, which
may include anyone who has a direct or indirect equity interest in the business
entity or someone with even a non-pecuniary interest in a non-profit organization.
So it is not necessary to be their property.
7. Shareholders have to follow the decisions given by the company. They can be
affected by the company’s action.
8. Shares of stock issued by corporation are distinct packages of ownership rights in
the property and assets of the corporation. But shareholders rights are limited.
Limitations may be imposed by the issuing corporation, by the jurisdiction in
which the corporation is incorporated or by regulatory laws of that country.

So, from the above discussion, we can come to this point that, when a company is
publicly traded and not owned by a single individual and goes public, it is treated as a
separate entity to reduce liability on the people who own the business (shareholders and CEO
and whoever makes decisions in the company). So yes it is owned by the share holders. This
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is because if one owns stock of a company, he owns a stake in that company. If he owns the
most stock, he is the majority shareholder and he has the most authority in the company. But
it is also needed to be noticed that, shareholders rights are limited. Stockholders typically
receive nothing if a company is liquidated after bankruptcy.

So we can say that, in some extent a company is the property of the shareholders and
in other it is not. As long as the corporate survives and services the share holders it is a
property, otherwise it is a liability.

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