There are various forms of ownership. But in the industrial world, joint-stock companies have dominance. In the company, ownership and management are different and only the members of the company (shareholders) are the owners. Hence, it is essential that responsibilities may be fulfilled towards them.
Otherwise, why will they invest capital in the company or will take care of its interests?
Social Responsibility of Entrepreneur Towards Owner
In short, the social responsibilities of the entrepreneur towards the business owners are as follows:
1. Safety of Invested Capital
The owner of the company desires the safety of his investment, economically and wisely.
Therefore, the responsibility of the entrepreneur is that he should fulfill this responsibility, otherwise, capital will start diverting from one business to another, which will cause deficiencies, like Industrial and business failures, depressions and decline in National production and national income, etc.
This responsibility should be fulfilled by the rational use of invested capital and by balancing the volume of risks and foresightedness.
Related: 10 Social Responsibility of Entrepreneur Towards Business.
2. Payment of Reasonable Dividend
The entrepreneurs should pay a reasonable dividend to the shareholders on invested capital, according to the provisions of the company act.
By doing so, business investment gets encouragement and which also adds to the credit of the securities of the organization.
3. Equal Treatment
The company may have many types of owners.
The entrepreneur should treat them equally.
Minority investment should not be so treated, that may adversely affect their interests.
4. Notice of Meetings
The information of meetings to the shareholders of the company should be given, in time.
Every member should have full freedom in exercising his voting right in all meetings.
Not only that, but the rights of the members also should not be influenced by unfair means.
5. To Disclose Facts
All important facts should be disclosed to the owners of the business, by the persons responsible for the operation and management of the business.
Detailed information about important contracts should also be regularly provided.
Besides, if any person has a personal interest in any particular contract, that should also be disclosed.
Related: 12 Role of Price and Non Price Factors in Marketing.
6. To Inform about Institution
The entrepreneur has also the responsibility to provide correct and authentic information to the owners, regarding progress programs, plans and financial position of the institution, in the General Body Meeting and through Letters, etc.
By doing so, they will remain assured about their investments and will feel self-satisfaction also.
7. Fair Returns on Investment and its Timely Payment
The entrepreneur should see that the owners get fair returns on investments in time and timely payment of invested capital should also be ensured.
Broadly, fair returns should exceed the interest rates prevailing in the market.
By doing so, investors get due to returns for the risks. Feelings for making investments also develop by doing so.
It also strengthens their physiology.
8. To Follow Owner’s Directions
The directions by the owner should be complied with, for the operation and management of the business organization.
These directions are clearly mentioned in the resolutions adopted in the meetings of the company.
Related: Responsibility of Entrepreneur towards Suppliers, Creditors, and Depositor.
9. Investment of Capital in Pre Determined Goals
The capital of the owners of the company should be invested only for predetermined goals.
The capital of the owner should not be used for unproductive purposes, like donations, etc. by going beyond on powers.
10. To Provide Information Which They Demand
Sometimes the owners desire information about the company or desire to dispel their Doubts.
In such conditions, the entrepreneur should not lag behind in providing the related information.
Thus, Now you know What responsibilities does a business have toward its owners and stockholders?
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