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Custom Company's Affairs Essay

The reason why a prospectus has to be issued whenever a company wants to go public is to enable potential investors to have an idea of what it is that the company does to enable them to make an informed decision of whether to invest in the company or not. The formation of a company is different from other forms of businesses which can make major changes without having a legal problem. That is different in the companies because they are legal persons on their own and are recognized as so by the law. Therefore, if it is recognized as a legal person by the law, it is not supposed to engage in illegal activities, and if this happens, it will be sued just like human beings.

Having mentioned that, it is important to note that the activities that the company engages in are always supposed to be known by investors/shareholders because they are the owners of the company. They are supposed to be informed before major decisions are made, such as having a different activity, other than one contained in the prospectus. It is possible to engage in a different activity but there is a procedure to be followed and that requires the members’ participation in making that decision and they do this through a vote. This saves the investors or shareholders from investing in the companies that do business that is contrary to the law or believes. For example, it is unlikely that a Muslim would invest in Farmers Choice FC, a company that deals in pork products and engages in pig farming. By informing them they are able to decide whether to withdraw their investment or to take the other course of action.

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As to employees, it is the same case; they need to be informed of what the company does. It is not only of for their sake but that of the company as well. For instance, De La Rule Company deals in sensitive areas like note printing and coin minting, its employees need to be informed so that they know how to handle themselves out there. Working for a company that makes adult movies is like promoting the practice, and it can only be good to inform them so that they can choose whether to work or not. It can be very hypocritical supposing a local church minister happen to works in such a company unknowingly and goes ahead to condemn the same in his or her sermon.

This therefore means that it goes beyond profits or salaries at the end of the year or the month. In as much as any investor’s aim is to receive as high dividend as possible, they also have a conscience which cannot allow them to invest in any business because it is profitable. The same applies to the employees, they are not just concerned about the pay cheque, they also need to know what the company does and after that they will decide on whether to continue to work or not, as it will be an individual employee’s call.

In nutshell, whether the source is legal or not, employees and investors should be informed about company’s activities and that is why the prospectus is there in the first place. But where there are changes in the business activities, then the shareholders should be involved and that is their legal right and they have a say in that.

Custom Company's Affairs Essay

Code: Sample20

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