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Corporate Social Responsibility (CSR) – Do the Shareholders Own a Company?

Do the shareholders own a company?

Yes or NO.

If one poses the question, “Do the shareholders own a company (incorporate entity)” the most likely answer is “Yes”. This is however not correct. Whilst the shareholders, and usually just the major shareholder, control the company through their power to elect the board of directors, they do not own the company. The obvious question is therefore, “If the shareholders don’t own a company then who does?” Would it surprise you to hear “Nobody”?

Nobody? How can this be?

A company has artificial personality. That is, the law recognized the incorporated entity has legal personality. It may contract, sue and be sued in its own right. As it is artificial however it cannot speak and think like a human being as a result it requires real people to speak and think on its behalf. Those humans are the directors of the company and they legally and effectively control the operations of the company.

What evidence is there for this contention?

Limited Liability

Shareholders are not responsible for the debts of a company as opposed to an owner who has unlimited liability. Directors however in some circumstances such as trading whilst insolvent, may have personal liability for the debts of a company.

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