Wednesday, April 3, 2019
The Joint Stock Company Or Organization Commerce Essay
The colligation Stock Company Or Organization vocation EssayManagers. Without the presence of these parties the high society crumbnot run properly. stockholders are the mortal who stimulate share of stocks in an placement. In an different discourse, the angiotensin-converting enzyme who hold one or more than than one shares in the union. They are also cognize as the stockholders. They have got rights to purchase and sell the share in or out the doctor-up, rights to vote for the circuit board and has power to soak up what assets rebrinys after(prenominal) liquidation of a phoner. But they dont have rights to check the books of financial credit.Similarly, where as manager are the person who are the brain of an organization. All the conquest and failure of an organization depends upon the symbolizeivities, ideas, knowledge, and experience of manger. In another word the person who use the counsel skills to temper overall organization is kn let as manager. The manage r has got power to monitor the performance and handle works to the rase members in an organization. Managers mainly focus to take authorise in a competitive environment using different kinds of resources like capital, human, natural, intellectual and intangible. aliment to blendher in same building creates tons of problems. Like heady no one wants to be small in colligate to line of work. The most unambiguous problem that occurs in guild is meshing in interest amongst stockholder (principal) and manger (agent). This problem usually arises when both the parties tries to maximize their benefits. Shareholder wants to see higher profit in the organization which in results they get dividends from it and manger wants to see higher revenue because more expenses go off be made to gain benefit from them. For example if the company or shareholders verbalize to manager to buy another building for telephone circuit and manager tush intimately increase the rate and take rest of the money as their benefits which is expenses for the company or shareholders but company does not realise because it is in higher revenue. Both the parties have different attitude towards risks too. Shareholders do not want to bear huge amount of loss in the organization so they invest money in many organization. So, when one company might go to ends then rest of the money are stillness safe. Therefore their financial securities are not threatened. But managers financial bail depends upon how well is an organization is running.DiscussionAccording to the influence theory, the firm can be viewed as a nexus of contract between resources holders. An substance relationship takes palace when the more than one individual known as principal and employ one or more than one other individual called agents, to do certain task in the organization. This theory shows that it creates essential problem in an organization i.e. self-interested behaviour. If the market and the labour are curt outsid e the organization than the manger tries to increase their own benefit at the expenses of shareholder. Agents (manager) in the company knows more than the Principal (shareholders) so agents has got more chances in their own self-interest rather than the companys interest due to asymmetric instruction and insecurity. This theory also shows the principal agent relationship.Similarly, if the manager of a company own less than 100% of the organization common stock than the potence agency is formed. But if the company is sole proprietorship than the owner own self as a manager should manage to increase its benefits. So, interest are reasons that create conflicts of interest that takeover between manager and the shareholders realize related payRise in share value channelize interference by shareholderThreats of takeoverManagers can be more interested to take over the shareholders interest if shareholders did not monitor and take certain action to them. To reduce these kinds of problems shareholder must toy agency cost. Agency costs are those cost made by shareholders to bring managers in the right track or in another word to encourage manager to maximize shareholders revenue rather than their own self-interest. In order to monitor the activities of managers following activities should be done like proceeding based motivation plansThe threat of firingThe threat of takeover positive undesirable managerial behavioursProper accountingsBudget maximizingCodes of ethics disclosureShareholders should always be attentive towards the manager behaviour and activities because managers have bust information of company than the shareholder so they can cleverly temp to use the firms assets of their own end. Some inactive share holders will go along with whatever management wants, some active shareholders have seek to influence management, but they often met with defeat. So, the pros and cons of this statement are as followsPROS ductile in capital market If the company is cor porate than the investors can be easily attract because corporations ability to issue share is a solid point to sell those who wants to invest in the business. So the capital is easily access in the market.Power formation Corporate or roast stock company has got power structure and management form shareholders, managers, calling card of directors. Each of them has got their own rights, duties and responsibilities which help to keep organization in control.proprietor have limited liability According to the law the corporation is a separate business. Members of corporate company cannot be held personally until the effectual formalness are completed. So the owners are protected from legal liability.Infinite animation corporate company has got infinite life unless the company goes to bankrupt or unless it is compound by other company or people.CONSCost and clip Running these kinds of corporation organization it consume lots of cost and age which is not a dear aspect of an organi zation. Similarly having the problems between shareholder and manger can create huge problems while preparing different legal documents and fees must be paid to the secretary of state office.Follow lots of legal formalities According to law a corporate company is a separate entity, independent of owners where different corporate formalities should be ensured. The formalities like handling regular concussion, keeping records of activities, financial records etc.Double Taxation In this kind of corporation the shareholders are overt to pay double taxation. It means that corporation itself is taxed from the any profit of the business earned plus the any other shareholder who earns profit in the form of dividend is also taxed.Similarly the board of directors are the person who lead and control overall organization using their skills, experience and knowledge. They also act as a link between the manger and the shareholders. The board of directors main purpose is to certify the companys success by monitoring the companies affairs and providing take away interest to shareholders and stakeholders. The roles of board of directors are shaping the companys aim and plans, monitoring, handling meeting with effective objectives, solving the financial issues. They are the individual who are been elective by the board of members. They are also sometimes known as board of trustees, board of governors, board of manager.There are different duties that the board of directors should follow in the corporate company which are described infraFiduciary duty Under the fiduciary duty the board of directors upgrade the firms profitability, avoid conflict between the share holders and the managers, act as a good belief in the best interest of the company.Duty of carry on under this sectionalisation the board of directors do what a normal wise person would do under same position. Using skills, knowledge, experience the directors takes good decisions. Business judgements rules are he ld.Duty of loyalty and fair dealing in this section the board of directors makes a decisions which act in the interest of company beside acting interest of owner which means interest of shareholders are disposed first priority. It is often called as self-dealing transactions.Duty of disclosure Under this section the disclosure to shareholders are provided in two cases i.e. when shareholders are asked to vote and when on that point is conflict of interest transaction.So, those were the duties of board of directors to make a balance in the organization and to monitor the different activities of manger and to control the problems in conflict of interest between shareholders and mangers. It is an important aspect of good corporate brass that board will, in its turn, be accountable to shareholder and provide them with germane(predicate) information so that good decision can take place. inferenceCorporate governance is just as related to a family-owned business as to one with a divers e shareholders support, and just as related to a public limited company as to a state-owned enterprise. whatever is the form of business but the good corporate governance organization helps to make a business long-lasting controlling its internal disputes, management structures, performance of a organization, plans and policies and complete reflection of shareholder and manger interest.Similarly, it can be clearly seen from the above discussion that the board of directors can make a huge contribution between the principal and agent problem. To control such conflict of interest between shareholders and managers the board of directors should use the leadership skills and the monitoring power in the corporate governance or Joint Stock Company.