Disinvestment and reinvestment Essay Example | Topics and Well Written Essays - 1500 words

Disinvestment and reinvestment - Essay Example Disinvestment refers to the use of a concerted economic boycott, with specific emphasis on liquidating stock, to pressure a government towards policy or regime change. Ronald Reagan, the former American President during his regime the disinvestment movement was at its peak, also opposed it, instead favoring a policy of "constructive engagement" These principles called for corporations doing business in South Africa to adhere to strict standards of non-discrimination in hiring and promotions to set a positive example. The most frequently-encountered method of "disinvesting" was to persuade state, county and municipal governments to sell their stock in companies which had a presence in South Africa, such shares having been previously placed in the portfolio of the state's, county's or city's pension fund. Several states and localities did pass legislation ordering the sale of such securities, most notably the city of San Francisco. The Sudan Divestment Task Force collaborates with Amne sty International, International Crisis Group, a variety of international NGO's, and most of the major socially responsible investing firms in the US. Calvert, the largest socially responsible mutual fund company in the US, has explicitly endorsed the targeted divestment approach as one that exerts maximum influence on the Sudanese government while minimizing unintended consequences, such as the important development role basic commerce in Sudan plays in improving general living standards for all. In simple words Disinvestment takes place when proprietors or people stop investing in the community, building or neighborhoods and thus to end up with slum areas. Disinvestment hampers economic growth of a nation as a barrier of Urbanization. Demographically, the Urbanization denotes redistribution of populations from rural to urban settlements in a process associated with development of civilization. Since disinvestment phase of an economy yields zero to the social and even cultural enhancement of the people, I would feel empathy for the people and the locality during such dark time. From a philanthropic point of view, it curbs the birthright of the populace to live a better life for certain political or demographic reasons. If opportunity prevails, I would love to motivate the populace to work hard in order to attract investors for the welfare and development of the region. 2. Reinvestment as the etymology suggests stands for the economic period when investors foresee dividend in certain area of production and desire to sustain growth with their inputs. When a community or proprietor see value in the land and begin to rehabilitate an area that has lost value over the years and worth fixing such as water front properties paves the way to reinvestment. Remarkably, it is a product or urbanization. There are two major types of reinvestments; Capital Reinvestment and Manpower cohesion. Investors usually accumulate such funds from dividends, interest and capital gains earned in an investmentor mutual fundto purchase additional shares or units, rather than receiving the distributions in cash. Therefore, in terms of stocks, it is the reinvestment of dividends topurchase additional shares. On the other hand, in terms of mutual funds, it is the reinvestment of distributions and dividends to purchase additional units of that fund. Similarly, in terms of tax gain or loss harvesting, it is the realization of losses to offset a capital gains over liability. This is definitely a

Corporation As a Legal Entity Case Study Example | Topics and Well Written Essays - 1250 words

Corporation As a Legal Entity - Case Study Example After carrying on a leather business for sometime, Mr. Salomon turned his business into a limited company. At that time the law required the number of shareholders to be essentially seven. Mr. Salomon held 20,001 shares with his wife and five children holding six remaining shares, making him the majority shareholder of the company. He also acted as the sole director of the company. Mr. Salomon sold his previous business to the company and received the payment in the form of debentures. The debentures were worth 10,000, which were secured by him with the charge, making him a secured creditor of the company. After some time his business failed and he had to liquidate the company. The debentures were paid off out of the remaining assets but nothing was left to pay the unsecured creditors of the company who sued Mr. Salomon to be personally liable for the debts of the company. The court's decision however went in the favour of Mr. Salomon on the basis that he had not committed any fraud and that he could not be held liable for his company's debts as a company is a separate being from that of its owners and directors, even when the majority of shares and debentures were held by him (Griffin, 2000) It is therefore evident from above illustration that a company's owners, shareholders, directors, and management cannot be termed as the same entity as the company itself, because in the light of law, these are distinct from each other. Therefore, the claim of the Bensons Carpfit Ltd's unsecured creditors that the owners and shareholders of the company should personally pay to them other than the company's assets is vague and has no legal obligation on the owner as commented by Cheffins (1997, p147), "in the ordinary course, a company's shareholders, directors, and officers are not personally liable for the company's debts". The case of Salomon v Salomon & Co validates this point and the court's verdict proved that director and shareholder could not be held liable for the debts of the company. The claim of unsecured creditors that Ben who holds the majority of shares, is the sole director and rest of the shareholders being his trustees in the company, should be held liable for the company's debts because he seems to have traded the company solely. The same was the claim raised by the creditors in the case of Salomon v Salomon & Co that Mr. Salomon being the majority shareholder and sole director of the company should be responsible for the company's debts. However, the court disagreed that even if that had been the case, Mr. Salomon could still not be held liable. Thus, the claim of the creditors of Ben's company holds no validity in the eyes of law. In the case of Levy V Abercorris Slate and Slab Co, the court enjoined that debenture entails existence or recognition of a debt. Ben also held debentures worth 10,000 having charge over the company's assets. The charge on Ben's debentures need to be determined by the court concerning their nature as being floating or fixed. In the case of Re Mamagh shoes ltd (1982), the court disregarded the parties' consideration of document as a fixed charge and reckoned it to be a floating charge. It means that the Ben's loan to his company was secured and in case of liquidation he was much in a