Shareholder – Definition, Characteristics, And Types Of Shareholders

A shareholder is a person who owns one or more shares in a company or financial company, whether commercial or industrial. The fact of buying a stock means that there is an investment in money, that is, there is a contribution to the capital of the company.

An action is each of the parts into which the capital and ownership of a company are subdivided. For that reason, shareholders are also called investors and, because they pay out capital as an investment in a company, they are classified as capitalist partners.

Shareholder characteristics

A shareholder can be a natural person or a legal entity, which indicates that a group of people can also meet to invest in a stake in the company. There is also the possibility that another company may also be a shareholder.

Being a shareholder requires having a set of rights related to the company that is acquired with the ownership of the share. That is, all shareholders have rights and obligations once they are owners.

Being a shareholder of a company, in addition to receiving certain rights, a series of obligations to the company are also contemplated. Usually, these obligations are expressed in the company’s bylaws so that they can be reviewed by people publicly.

Main types of shareholders

A shareholder can be a natural person or a legal person. Being an investor gives the owner or holder of the shares the status of owner and partner. As previously mentioned, these partners are also called capitalist partners and are involved in the management of the company.

They even have responsibilities and decision-making power depending on the percentage of investment they contribute to said company. In other words, the more shares a holder has of them, the more decision-making power he will have.

Since the shares are the parts into which the ownership of a company is divided, owning shares means that you also own a portion of it, defined by the percentage of the company that your shares represent.

1# Reference Shareholders

These shareholders are those that are part of the group that has a significant amount of shares. For this reason, they have the ability to intervene and influence the management of the company.

They then control, directly or indirectly, the majority of the share capital. Even being in the minority, they can significantly influence the rest of the partners in order to intervene and influence the management of the company, for example, to appoint the members of the Board of Directors.

2# Minority shareholders

They are those investors who have few shares so they do not have the capacity to influence the direction and management of the company. However, this group could regroup and form an association between them.

With this association, they can obtain a representation that allows them to act and influence business management by reaching, among all, a relevant social capital figure that allows them to achieve greater participation in decision-making.

3# Shareholders of preferred stock

To this group of investors belong those who only acquire a preferential right only in the distribution of benefits. Although they are part of the company’s capital stock and their holders are not granted political rights.

These actions have a fixed profit, which is delivered periodically. This type of investment, unlike the reference and minority ones, does not have the right to vote on the management decisions of the company.

Shareholder Rights

When purchasing shares in the capital of a company, the owners of those shares are granted rights that are basically divided into political or management rights and economic rights.

Among the political rights, are the right to vote and access to information that allows them to know the business management and economic rights contemplate the granting of shares according to the percentage of participation they have.

The fundamental rights of the shareholders are summarized below:

  • They acquire rights from the moment they invest in the purchase of shares.
  • Enjoy the opportunities of owning a small part of the company.
  • Receive dividends.
  • Have a voice in the general meeting of shareholders.
  • Receive information on financial activity.
  • Make suggestions and proposals.
  • Make challenges.
  • Transfer shares.
  • Separate from the company.

Invest in shares

We usually hear many people approaching the financial and investment world wondering why investing in the stock market. Of course, there are some risks when buying shares because there is the possibility that you lose capital saved. Therefore, it is very important that investment offers tangible benefits.

When buying or selling shares in companies that are listed on the stock market, keep in mind that this generates expenses for processing fees, stock fees, among others. On the contrary, if the company is not publicly traded then it must be the investor himself who manages his operation.

The investment in shares of a company that is listed on the stock exchange may be more advantageous than the investment in unquoted shares. This is because generally listed companies are larger and with greater floating capital, which gives it greater liquidity.

A shareholder

As a shareholder of a company, in addition to receiving economic benefits, it also assigns your responsibilities to it, because everyone is interested in working well and achieving economic benefits. That way everyone wins.

Regardless of the amount invested you acquire some general rights. However, in other cases, whose investment capital is large, you will have other responsibilities and rights that assign you a different status within the organization.

Basically, these benefits and rights are related to the obtaining of shares or profits and also of another type that has to do with some financial operations.

Finally, remember that a shareholder must be able to give his time and capabilities to the company. In other words, invest your time and your best effort for the proper functioning of the project.

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Ahmed Ismail

I'm a Civil Engineer. I like reading everything related to Business so I decided to launch the "Fast Grow Company" website to help Entrepreneurs in their business journey. Keep updated and follow us.

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