'The shareholder's democracy not only can play important role in stimulating the Board of Directors, raising Company's performance but also ensuring that the community at large takes a greater interest in industrial prog

Democracy means the rule of the people, by the people and for the people. In that context, the shareholder's democracy means the rule of shareholders, by the shareholders, and for the shareholders in the corporate enterprise, to which the shareholders belong. Precisely, it is a right to speak, congregate, communicate with co-shareholders and to learn about what is going on in the company. Under the Companies Act, 2013, the powers have been divided between two segments: one is the Board of Directors and the other is of shareholders. The Directors exercise their powers through meetings of Board of directors and shareholders exercise their powers through Annual General Meetings/Extraordinary General Meetings. Although constitutionally, all the acts relating to the company can be performed in General Meetings, most of the powers in regard thereto are delegated to the Board of Directors by virtue of the constitutional documents of the company viz. the Memorandum of Association and Articles of Association. It is a widely acclaimed fact that in any corporate enterprise, the shareholders are the owners. But in fact, they are seldom able to exercise any ownership rights except to sometimes cast votes at General Meetings. The members therefore, are only passive investors rather than active participants in the governance of the corporate process. Still the directors, as per law, are answerable to the shareholders at least for two reasons, one the shareholders are directly concerned with the economic viability of the investee company so to feel sure about the safety of their investment and secondly being the recognised owners of the company to enforce their rights to control the company as and when the company enters into contractual relationship with third persons thereby incurring greater obligations. Thus, the shareholder's democracy can play an important role in stimulating the Board of directors, raising company performance and ensuring that the community at large takes a greater interest in industrial progress. Recognising the supreme authority of the shareholders, the Companies Act, 2013 has given authority to them to appoint directors at the Annual General Meetings to direct, control, conduct and manage the business and affairs of the company.