Your assignment is to prepare a report to be submitted to the AICD  evaluating the evidence that a responsibility of a company director is to place shareholder interests above those of other stakeholders.

INTRODUCTION

In this study, the employee is hired as a corporate governance consultant in an Australian Institute of company directors. In this study, the Australian Institute of company directors wants a vivid description of the proof to see that the interests of the shareholders are preferred more than the interests of the stakeholders (Padachi et al. 2017, p. 3). There are possible recommendations, evidence and also instances discussed, which gives more importance to the interests of the shareholders rather than the stakeholders of the business firm (Parham and Economics, 2014, p. 5). A detailed discussion is also made about the importance of shareholders is given in this study. 

DISCUSSION 

According to (Aerts et al. 2017, p.10), the importance of shareholders is much more to a business firm than to the stakeholders. As a corporate governance consultant, the shareholders of a business firm are the ones who directly invest their shares or money in a business firm. The shareholders are directly linked with the success of a business firm. The shareholders of a business firm provide more support to a business firm than the stakeholders of a business firm. The company director of a business firm should always show more importance to the shareholders of a business firm than the stakeholders of a business firm (Agrawal and Cooper, 2017, p. 15). The shareholder theory states that they always give funds to the director or head of the business firm to run the firm successfully. There are many research papers that show that the shareholder's interests are preferred more than the interests of the shareholders more than the stakeholders of a business firm. 

Roles and rights of shareholders

The company directors or the head of the business firm should always prefer the effectiveness of shareholders more than the interests of the stakeholders of a business firm. The shareholders of a business firm always play an important role in the overall welfare of a business firm. There are two types of shareholders acting in a business firm (Rönnegard and Smith, 2013, p. 20). The small investors are those who have the least portion or hold on the total share of a business firm (Amoako and Mawutor, 2015, p. 25).In contrast, the large shareholders of a business firm play a major role in the long term success of a business firm. Ex- In developed countries like USA., the large business firm gives the shareholders more rights and are also involved in the decision making of the overall profit of the business firm.  The different rights of the shareholders include the right to vote on electing the head or managing director of the business firm. They are also given the right to recommend new changes or bring about the new enactment of laws that are more useful to the success of a business firm. They also vote on mergers or dissolutions of a business firm (Scholes and Wilson, 2014, p. 28) . They take active participation in the board meetings of a business firm and also give their decision on giving decisions that are useful for the long term success of the business firm. The company directors of a business firm also take active participation in meeting the demands of the shareholders and also try to resolve their problems all the time (Armstrong et al. 2015, p. 30). In many countries like the UK, USA, the managing director or the head of the business firm vests or gives all the power to the shareholders of the business firm. They depend on the decisions of the shareholders for the profit-making of the business firm. As a corporate governance consultant, the shareholders invest the shares in the business firm, and so their interests are preferred more by the head of the business firm than the stakeholders of the business firm. Ex- In a large business firm like Cadbury, Schweppes has more than two billion shares in the current market scenario of the UK and USA. The head or managing director of the company still gives more importance to the well being of the shareholders rather than the interests of the stakeholders of the business firm like the employees of the business of the firm, who are responsible for the profit-making of the firm.  As stated by (Claessens and Yurtoglu, 2013, p. 35), it is very much important for the business firm to look after the interests of the shareholders than the shareholders to maintain the stability of the business firm. 

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