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ACCA Applied Knowledge · Financial Accounting · Duties and responsibilities of those charged with governance

Which of the following is a typical right of ordinary shareholders in a company?

Ordinary shareholders typically have the right to vote at general meetings, including on the appointment of directors and auditors. They do not run day-to-day operations, they are not guaranteed a fixed return, and they do not sign off the accounts as accounting officers.

  1. ATo vote on the appointment of directors and auditors at the general meetingCorrect
  2. BTo decide daily operating decisions such as supplier selection
  3. CTo receive a fixed rate of interest each year regardless of profits
  4. DTo sign off the financial statements as the company's accounting officer

Explanation

Ordinary shareholders usually vote on appointing directors and auditors and on other matters reserved to members. Day-to-day operations are delegated to the directors and management. A fixed return regardless of profit is characteristic of debt holders, not equity holders.

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