Introduction: -Investors provide finance to company which is considered as backbone of business. They are creditor of business. Business should fulfill following responsibility towards investors.
Definitions: - "The personal obligations of the people as they act in their own interest to assure that the rights and legitimate interests of others are not ignored." Defined by.......... (Koontz and O'Donnell)
Responsibilities towards Investors:
1. Return on Investment: -Investor invests their money in business and accepts risk factor. This should be adequately recognized by business. They should get fair returns on investment regularly in the form of interest. Following points should be considered.
· Fair return on investment.
· Safety of investment.
· Steady appreciation of business.
2. Proper Disclosure of Information: -Management should present full and factual information to investors. They should get regular reports, circular and statements of profit. The financial performance of company must be provided correctly so that prospective investors can take right decisions to invest in future. This will ensure them that their investment is safe.
3. To Maintain Transparency: -Investors provide working capital to run business efficiently. Business should maintain high degree of transparency in its operation. It is expected from suppliers of funds.
4. Handling Grievances: -A company should handle investor's grievances if any. There should be effective methodology for this purpose. All queries regarding any other issue must be answered satisfactorily way.
5. Proper Conduct of Meetings: -company should call meetings of investors regularly to provide information about business. Proper notices of meetings should be sent. In period of crisis, investors should be taken into confidence. Factors responsible for failure should be known to investors.
6. To maintain Solvency and prestige: -Business should maintain sound financial position, solvency, prestige and goodwill to satisfy investors. Business should take continuous efforts for research innovation and expansion programme.
