Shareholders are individuals or organizations who invest their money in a business by purchasing shares of stock. They make a profit or lose money on their investment, based on the performance of the company as well as its ability to pay dividends. They also get the benefit of capital appreciation, which occurs when the value of their shares rises over time. The rights and privileges of shareholders might vary based on state laws and the terms of a corporation’s charter or bylaws.
In general there are two kinds of shareholders Common stockholders (common stock) and preferred share owners. The majority of shareholders are common stockholders and they are entitled to vote at shareholder meetings. They can be part of the decision-making process and check reports. They can be eligible for preferential dividends, and also have priority over ordinary shares in liquidation but only after the creditors have been paid.
The term “shareholders” could also refer to people who own bonds and debentures issued by the company. These are debt instruments that offer the investor a certain rate of return. These investors aren’t usually involved in the day-to-day activities of the company, but they are able to participate in decisions when their interests are represented by the company’s governing body.
Strategic shareholders are investors who buy shares in a company to accomplish an objective of strategic importance, such as acquiring new markets or technologies. This kind of shareholder plays an essential role in a family business, as they can comprehend the scope of the venture and its potential and are willing and capable of taking risks to ensure the return of their investment.
types of shareholders in a business
