A shareholder, also known as a stakeholder, can be either a natural person or a legal person that holds stocks in a company. A shareholder owns a minimum of one share in a company or a mutual fund, making them a partial owner. There are two types of shareholders: common and preferred.

Common shareholders are those that own a company's common stock. They are the most prevalent type of stockholders, and they have the right to vote on matters concerning the company.

Preferred shareholders, on the other hand, are less frequent. Unlike common shareholders, they own a share of the company's preferred stock and have no voting rights or say in managing the company. Instead, they are entitled to a fixed amount of annual dividends, which they will receive before the common shareholders are paid their part.

Rights and Benefits of a shareholder:

  • Voting Rights: Shareholders typically have the right to vote on certain corporate matters, such as electing the board of directors or approving major corporate decisions.
  • Dividends: If the company generates profits, it may choose to distribute a portion of those earnings to shareholders in the form of dividends. The amount of dividends you receive is determined by the number of shares you own.
  • Capital Appreciation: As a shareholder, you have the potential to benefit from the increase in the company's stock price over time. If the stock price goes up, the value of your shares increases, allowing you to sell them at a higher price and potentially realize a capital gain.
  • Limited Liability: Shareholders generally have limited liability, meaning their personal assets are protected from the company's debts and obligations. Their risk is typically limited to the amount they have invested in the company's shares.
  • Information Rights: Shareholders have the right to access certain information about the company, such as financial reports and disclosures, to make informed investment decisions.

Join our newsletter

Your go-to source for European startup news, equity trends, VC insights, and investment opportunities.

© 2024 SeedBlink. All rights reserved.