Stock Market

Common stock represents an ownership position in a corporation. By purchasing a share of a corporation, a person can become a shareholder with some degree of ownership and control over the company. Common stockholders are thus the owners of a corporation and they have certain rights and privileges. Common stock gives several rights to the stockholders. Stockholders enjoy right to attain annual shares. But, in Nepal stock market, the shareholders are avoided due to negligence of company management as well as the regulatory thrust on protection of investor's right is found to be less concerned. The existing Shareholder's Association of Nepal (SAN) is totally inactive and sleeping without raising voice to defend the shareholder's right. Even the establishment and development of a number of Investor's Forum are not found to play active role in restoring and protecting the interest of shareholders. Common stockholders have a residual claim on the assets and benefits provided by the company and the are given least preference in the distribution of earnings. It is because debt holders, creditors and preferred stockholders must be paid as scheduled before common stockholders bear the greatest risk. But they also enjoy higher return on corporate success in the form of higher dividends and capital gains.
Common stockholders are the owners of the company. Because of that ownership, rights of common stocks are as follows;

Rights of the common stockholders
Common stockholders' get rights only by virtue of making investment in the share of the company. Their rights depend on their expectations to get dividend, share in the earnings of the company and other participatory approach of exercising voting rights, discussing in agenda brought in annual general meeting and other inter-reactions. The rights of the common stockholders are follows;

Right to get dividend
Common shareholders invest in the shares of the company to exercise the rights to get dividend. If not, they raise questions in the annual general meeting to the board of directors regarding their accountability and duty in shareholders' interest.

Right to earnings
The common stockholders can make a claim on the earnings of the company although legally they cannot enforce the management to pay earnings as dividend. they can simply influence and convince the justifications to pay earnings as returns on their investment.

Right to claim on assets
The common stockholders have right to get the distribution of assets in the event of liquidations. This is possible only after meeting all the obligations of the creditors and employees claims on the company.
Right to inspect books of account
The company act has provided the right to the shareholders to see the books of account in case of their doubt on the maintainence of accounts. In practice, this is very rare exercise.
Right to attain general meeting
Shareholders have the right to participate in annual general meeting and raise the queries about the financial statement for discussions.

Right to vote
Shareholders are different from others because they have the voting rights to elect the members to serve in the capacity of directors in the board of the company. However, shareholders are not conscious to exercise their voting rights as the provide proxies instead of actively participating in enforcing their voting rights.
Responsibilities of the common stockholders
An only exercising right is not sufficient because rights become meaningful only when shareholders feel responsibilities to have good moral conduct to follow the discipline in the growth of the company. As such, shareholders cannot separate the responsibilities, which they have for the companies. The responsibilities are to cooperate with company, provide fruitful suggestions and maintain discipline. The responsibilities of the common stockholders are as follows;

Duty to cooperate
Shareholders have an important duty to cooperate with the management of the company in helping how to improve the performance of the company. Simply criticizing the company and management is not a healthy practice rather shareholders have to think positively to encourage management to enhance efficiency of the company.
Duty to suggest
Shareholders have to be constructive in providing valuable suggestion useful to the company so that the management will consider such suggestion useful as feedback to improve the performance than before.
Duty to maintain discipline
Shareholders should be obedient to maintain discipline to have good moral behaviour and code of conduct. They have to follow the norms laid down without violating the laws, rules and regulations of the company.

Duty to be vigilant
The shareholder should be self conscious to know and get information to be professionally oriented and independent in thinking and judgment.

General organization of the stock market
An organized security exchange provides a fixed place at which trading in securities is made possible. The organized securities exchange is a voluntary association that endeavors to maintain a smoothly operating market place. In other words, organized securities exchange is an auction market with price set by large number of buyers and sellers in numerous little auctions occuring daily on the floor of the exchange. In order to be a member, one has to own seat by way of membership. The board is empowered to accept or reject the membership and only the persons of sound financial position and higher public reputation are allowed to be members of the exchange. The members are usually brokers i.e., partners and directors of brokerage houses. The stringent laws of fines, suspension and expulsion discipline members. The members can submit proposals to the exchange if they have some changes to make and the exchange reserves the rights to approve such proposals. It is up to the exchange to allow or reject application for new issues listing. As such, the organizes securities exchange provide not only market places for securities but, at the same time, furnish facilities to the members to have a free, close and continuous trading in securities with little variation in securities prices.
Furthermore, the organized securities exchange provides liquidity for investors to sell their holdings at the time of emergency-funds needed and render a direct service to the industries to raise capital directly from the market. The organized securities exchange makes the determination of security prices easily within fair means through the automatic free play of the forces of demand for and supply of securities. In Nepal's context, the Nepal Stock Exchange is playing crucial role and function to develop organized securities exchange through number of studies already conducted. However, all these studies were not seriously considered for implementation due to various externally-and-internally imposed constraints. Although some attributes of organized securities exchange such as listing rules and securities transactions act has been developed, but the reality of the trading in securities reveals no buyers and sellers to conduct transactions.