Shareholders can be organisations or individuals who invest money in a company through the purchase of shares. The performance of the company, and its ability pay dividends, determines whether they earn an income or lose. They can also benefit from capital appreciation when the value of their shares rises over time. The rights and privileges of shareholders may vary according to state law and the terms of a corporation’s charter or bylaws.
There are two types of shareholders in a business that are common stockholders and preferred share holders. The majority of shareholders are common stockholders and they are entitled to vote you can find out more at shareholder meetings. They can take part in the decision-making process as well as scrutinize the reports. Preferred shareholders are entitled to preferential dividends, and have priority over ordinary shares in the event of liquidation.
The term «shareholders» can be used to refer to individuals who hold bonds and debentures issued by the company. These are debt instruments which give investors a certain amount of return. These investors are not typically involved in the day-to-day activities of the business, however they can have a say in the decision-making process when their interests are considered in the company’s governance body.
Strategic shareholders are investors who buy shares within a company in order to achieve the specific goal of the company that includes acquiring new markets or technologies. This type of shareholder plays an important role in a family company, since they understand the scope of the venture and its potential and are able to take risks for the benefit of their investment.