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Who are the likely stakeholders in a limited liability company - Sam's Law Guide

Who are the likely stakeholders in a limited liability company

Considering the facts of Domazo Bazekuketta in the previous post He would like to partner with experienced business managers at a strategic level who can help him with decision making, supervise management of the entity, and give him a perspective that is not biased by ownership. He wish to know the stakeholders of this entity and why is it important to manage them?
According to the Black’s Law Dictionary, 8th edition at p.4396, stakeholders are people who have an interest or stake in a business or enterprise, though not necessarily an owner. For a company, the stakeholders are those entities or individuals who influence the actions of the company as well as those who are affected by the actions of the corporation. In the instant case, the stakeholders to the company include the directors, shareholders, employees, creditors, government, consumers, suppliers
and distributors
A Stakeholder is any group, individual or community that is impacted by the operations of the organization, and therefore must be granted a voice in how the organization functions. According to the preface of the OECD Principles of Corporate Governance, good cooperate governance helps to… ensure that corporations take into account the interests of a wide range of constituencies, as well as of the communities within which they operate, and that their boards are accountable to the company and the shareholders. This, in turn, helps to assure that corporations operate for the benefit of society as a whole.
A business can be a great benefit to a community, providing tax money, local access to unique goods and services, jobs and community development programs. However, a business can also be a drain on the community by increasing traffic, creating pollution and hurting small businesses. As a result, businesses must look at the needs of the community, and ensure that negative repercussions are minimized while community engagement is maximized

There are two types of stakeholder and that is the internal and external stakeholders

These are individuals or groups who are directly and/or financially involved in the operational process. These influence the organizations mission and vision, formulate the strategy that realizes the mission and vision and finally implement the strategy.
1. Owners/ directors of the company
2. Employees
3. Managers

1. Shareholders
2. Government and its entities like URA
3. Suppliers
4. Creditors
5. Consumers
6. The general public

Directors: Directors are appointed or elected members of a company board who are responsible for the day-to-day running of the business. Domazo Bazekuketta has to manage the directors because they run the company and are responsible for the progress of the same. They have voting rights according to section 139 of the Companies Act 2010 and make decisions. The mismanagement of the Board of Directors of the company can lead to the eventual failure, which is a loss to the business owner. Directors make board resolutions and act as agents of the company hence proper management of the same can be profitable to the company because decisions are made promptly and objectively.

Shareholders: A shareholder is any person, corporation, individual or institution that owns at least one share of the company’s stock. It is important to manage shareholders because they can make agreements or resolutions that can be passed by the board of directors under section 150 of the companies Act 2010. Shareholders contribute capital to the company and the mismanagement of the same can lead to capital loss to the company. More over under section 198 of the companies Act 2010 it is the duty of the director to manage the shareholders in a proper manner. Therefore shareholders should be managed to increase the company share capital and retain consolidate already invested shares.

Creditors: A creditor is a party that has a claim on the services of another party. It is a Person or institution to whom money is owed. Creditors lend the company money, goods and services, which helps in the day-to-day running of the business. Managing creditors is beneficial to the company for the reason that creditors may be required to give more credit to the company and creditors can easily adjust dates of payment of debts when they are properly handled. Section 244 of the companies Act 2010 provides for creditors’ rights on amalgamation. Therefore, Bazekuketta has to consider keenly the way he manages creditors and according to Sections 265 and 77 the courts can enforce creditors’ rights in case of default. Conclusively, creditors should be managed to maintain the company’s investments capacity.

Employees: An employee is a person who has agreed to be employed to work for some form of payment under the contract of service as provided for under the interpretation section of the Employment Act 2006. The management of employees in a proper manner promotes productivity in form of quality and quantity of goods, which helps in the progress of the company. More so, employees represent the company outside its premises and negative opinion of the employees can distort the image of the company and can attract the attention of labor officers, which may be detrimental to the company in form of time and money. Therefore, employees should be properly handled to enable the progressive development of the company.

Government: Government is a group of people with the authority to govern the state or country. Compliance with government laws is beneficial to the company since its business programs are not interfered by government officials. Paying revenues, filling annual returns (Section 265 of the Companies Act), procuring a trading license and filling document required by Government can be beneficial for the progress of the business since it is not interfered in its running of business. Moreover, compliance with public official makes it easy to win tenders, bid and applications for tax exemption. Therefore, Bazekuketta must comply with government regulations to secure smooth sailing in the Ugandan business world.

Consumers: Consumers are purchasers or users of goods and services. Managing consumers is important in promoting consumer compliance and consolidates consumers, which creates increases profits. Consumers are managed through quality products, quantity products, sales promotions and customer care. Notably, when customers are managed, they attract other consumers and this in turn widens the market for goods. Therefore, Bazekuketta should manage customer to promote the sales of the company.

Suppliers: Proper management of suppliers assists in continued production. Suppliers in a beer factory are responsible for providing raw materials for the company. The mismanagement of the same can cause a deficiency in production of goods, which is dangerous to the progress of the company. Therefore suppliers should be managed in a proper manner to maintain and increase production levels.

Distributors: Distributors can be employees or agents of the company and they are responsible for the circulation of the goods produced to the designated market. Actually, management of distributers promotes sales and yields profits, which is the main objective of the corporation. Therefore, Bazekuketta should manage suppliers to promote sales and increase profits of the company.

Community and the environment: The above involves the surroundings of the company. The community includes all people impacted by company activities. That can be the company neighborhood or other affected Areas by the production activities of the company. Managing the community can be possible by employing people from the community, community outreaches and development. This is important because people would hold the company at heart, which creates a positive opinion in the community leading to harmony between the company and the surrounding community.
On the other hand, the environment can be dealt with by complying with environmental regulations be doing activities that are environmental friendly like treating wastes and reduce the emission of greenhouse gasses. This is important because environmental officials would be avoided and health would be promoted in the company and its surrounding which means the company will have healthy workers in a healthy environment.

Why it is important to manage the stake holders
It is important to manage them because;
1. Stakeholders can affect positively or negatively the ability of an organization in attaining its goals and objectives. They can affect the implementation of the organization’s strategies. This is most probable among employees, and such , it is imperative that they are motivated and their interests are taken into consideration
2. Customers help the business to identify changing trends in the market and so prepare business operators for future demands. A customer can also prevent a company from adopting strategies that affect them adversely. So it is very important that the business entity adopts strategies that meet the needs of its customers.
Who are the likely stakeholders in a limited liability company Who are the likely stakeholders in a limited liability company Reviewed by Lalaw School Guide on September 09, 2019 Rating: 5
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