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the protection of the rights of shareholders in cameroon

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This research project deals with the protection of the rights of shareholders in Cameroon. A shareholder is an individual or institution (including a corporation) that legally owns one or more shares of the share capital of a public or private corporation.

Shareholders may be referred to as members of a corporation this study aims to spell out the various challenges faced by shareholders in Cameroon, and the various laws enacted to protect the rights of women in Cameroon and the rest of the world. To attain this goal, the doctrinal research method was adopted.

However, the research findings revealed that, regardless of all the laws enacted to protect shareholders and help protect their rights in the corporations, there are still some lapses. This study considered all relevant legal options and the current position of the law on how the shareholder’s rights may be enforced and protected

1.2. Background of the Study
A company, abbreviated as co., is a legal entity representing an association of people, whether natural, legal or a mixture of both, with a specific objective. Company members share a common purpose and unite to achieve specific, declared goals. Companies take various forms, such as Voluntary associations, which may include nonprofit organizations, Business entities, whose aim is generating profit, financial entities and banks Programs and educational institutions.
A company can be created as a legal person so that the company itself has limited liability as members perform or fail to discharge their duty according to the publicly declared incorporation, or published policy. When a company closes, it may need to be liquidated to avoid further legal obligations.
A commercial company shall be formed by two or more persons who agree, by contract, to assign assets in cash or in-kind to an activity for the purpose of sharing profits or benefiting from savings that may accrue Therefrom. The members of the company shall bear the losses by the conditions laid down by this Uniform Act. A commercial company shall be formed in the common interest of the members.
A commercial company may also be formed, as provided by this Uniform Act, by a single person, referred to as a «sole proprietor”, based on a written document.
A shareholder (also known as a stockholder) is an individual or institution (including a corporation) that legally owns one or more shares of the share capital of a public or private corporation. Shareholders may be referred to as members of a corporation. By law, a person is not a shareholder in a corporation until their name and other details are entered in the corporation’s register of shareholders or members.
The influence of a shareholder on the business is determined by the shareholding percentage owned. Shareholders of a corporation are legally separate from the corporation itself. They are generally not liable for the debts of the corporation and the shareholders’ liability for company debts is said to be limited to the unpaid share price unless a shareholder has offered guarantees. The corporation is not required to record the beneficial ownership of a shareholding, only the owner as recorded on the register. When more than one person is on the record as the owner of a shareholding, the first one on the record is taken to have control of the shareholding, and all correspondence and communication by the company will be with that person.
Shareholders may have acquired their shares in the primary market by subscribing to the IPOs and thus provided capital to the corporation. However, most shareholders acquire shares in the secondary market and provided no capital directly to the corporation. Shareholders may be granted special privileges depending on a share class. The board of directors of a corporation generally governs a corporation for the benefit of shareholders.
Shareholders are considered by some to be a subset of stakeholders, which may include anyone who has a direct or indirect interest in the business entity. For example, employees, suppliers, customers, the community, etc., are typically considered stakeholders because they contribute value or are impacted by the corporation.
Subject to the applicable laws, the rules of the corporation and any shareholders’ agreement, shareholders may have the right:
• To sell their shares.
• To vote on the directors nominated by the board of directors.
• To nominate directors (although this is very difficult in practice because of minority protections) and propose shareholder resolutions.
• To vote on mergers and changes to the corporate charter.
• To dividends if they are declared.
• To access certain information; for publicly traded companies, this information is normally publicly available.
• To sue the company for violation of fiduciary duty.
• To purchase new shares issued by the company.
• To file shareholder resolutions.
• To vote on shareholder resolutions.
• To vote on management proposals.
• To what assets remain after a liquidation.
The above-mentioned rights can be generally classified into
(1) cash-flow rights and
(2) Voting rights.
While the value of shares is mainly driven by the cash-flow rights that they carry (“cash is king”), voting rights can also be valuable. The value of shareholders’ cash-flow rights can be computed by discounting future free cash flows. The value of shareholders’ voting rights can be computed by four methods:
• The difference between voting shares and non-voting shares (dual-class approach).
• The difference between the price paid in a block-trade transaction and the subsequent price paid in a smaller transaction on exchanges (block-trade approach).
• The implied voting value obtained from option prices.
• The excess lending fee over voting events.
A beneficial shareholder is a person that has the economic benefit of ownership of the shares, while a nominee shareholder is a person who is on the corporation’s register as the owner while acting for the benefit and at the direction of the beneficiary, whether disclosed or not.
Primarily, there are two types of shareholders.
Common shareholders
An individual or an institution can be a common shareholder who owns common shares within a company. This type of shareholding is more common. Common shareholders have the right to influence decisions concerning the company and can file class-action lawsuits in case any wrongdoing happens.
Preference shareholders
In this, the shareholder is paid a fixed sum of dividend even before the common shareholders and they have no voting rights within the company.
Debenture holders:
Debenture holders are not the owners but are the creditors of the company. They do not have any voting rights. Instead of receiving dividends, they accept interest payments from the company.
This interest payment is paid at a fixed rate decided between the company and the debenture holders. Debenture holders are paid first at the time of winding up since they are the creditors of the company.
Shareholders invest in corporations primarily for economic gain. There are two main ways in which shareholders can profit from a corporation: by receiving distributions of the company’s profits and by selling all or part of their interest in the corporation. These methods correspond with the two main economic rights of the shareholder: the right to receive dividends and the right to sell shares.

Being a shareholder has many benefits, but when it comes to dissolving a corporation, it’s important to know that the dissolution may have a financial impact on shareholders. Much depends on how the corporation is dissolved, as well as how involved a shareholder is in the management and operation of the corporation.

In voluntary dissolution, if assets are distributed to shareholders before all of the corporation’s debts have been paid; creditors can sue shareholders for outstanding debt. However, generally, a shareholder will only be liable up to the amount that’s been distributed to them.

However, be aware that shareholders who function as officers or directors can be found personally liable for payroll- or tax-related amounts that remain outstanding.

This becomes a burden on the shoulders of the company since they would be exposed to misery and further bitterness after the dissolution of the company.
Based on this, the researcher has embarked on this research to make policy recommendations which shall help in solving the problems highlighted.
What are the laws protecting shareholders in Cameroon?
1- What is a company and what are the procedures for the formation of a company?
2- Who is a shareholder and what are the various types of shareholders in Cameroon?
3- To what extent are shareholders’ rights protected during the dissolution of a company and what are the challenges encountered.
4- What then are the possible recommendations for the protection of the rights of shareholders in Cameroon?

Further readings: Law research paper topics and materials

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