Shareholders are individuals or organizations that invest money in a business by purchasing shares of stock. The performance of the company and the ability to pay dividends, determines whether they earn either a profit or lose. They also benefit from the potential for capital appreciation, which is when the value of the shares increase over time. Shareholders’ rights and privileges may differ depending on state law the company charter or bylaws.
There are generally two types of shareholders in a business that are common stockholders and preferred share holders. Common shareholders are massive in number and have voting rights at shareholder meetings. They can be part of the decision-making process and check reports. They can receive preferential dividends and have priority over ordinary shares in liquidation but only after creditors have been paid.
The term “shareholders” can also refer to those who hold bonds and debentures issued by the company. These are debt instruments that give investors a certain amount of return. They aren’t typically involved in the day-to-day activities of the company, however they are able to participate in the company’s decisions if their interests are represented in the company’s governing body.
Strategic shareholders are investors who buy shares in a company to accomplish an objective of strategic importance that includes acquiring new technologies or markets. This type of types of shareholders in a business shareholder plays a vital role in a family company, since they can comprehend the scope of the project and its potential and are capable of taking risks for the benefit of their investment.