What are the responsibilities of business towards the Investors?

What are the responsibilities of business towards the Investors?

Solution:

 

Responsibilities Towards Investors:

 

Investors provide finance to the company. They are creditors of the business. Businesses should fulfill the following responsibilities towards investors.

 

Proper Conduct of Meetings:

The company should call meetings of investors and provide information about the business. Proper notices of the meeting should be sent to them. In a period of crisis, investors should be taken into confidence. Factors responsible for failure should be known to the investor.

 

Return on Investment:

Investors invest their money in business and accept risk factors. They should get fair returns on investment regularly in the form of interest. The following points should be considered
a. Fair returns on investment
b. Safety of investment.
c. Steady appreciation of business.

 

Handling Grievances:

A company should handle investor's grievances if any. There should be an effective methodology for this. All queries regarding any other issue must be answered in a satisfactory way.

 

Maintain Transparency:

Investors provide long term capital as well as working capital to run the business efficiently. So it should maintain a high degree of transparency in its operation.

 

Proper Disclosure of Information:

Management should present full and factual information to investors. They should get regular reports, circulars, and statements of profit. The financial performance of the company must be provided correctly so that prospective investors can make the right decisions to invest in the future. All of this will ensure that their investment is safe.

 

Maintain Solvency and Prestige:

Businesses should maintain a sound financial position, solvency, prestige, and goodwill to satisfy investors. Businesses should make continuous efforts for research, innovation, and expansion programmes.