Types of Shareholders in a Business

Shareholders are organisations or individuals who invest money in a company through the purchase of shares. They can earn a profit, or loss on their investment, based on the performance of the company http://companylisting.info/ as well as its ability to pay dividends. They also get the benefit of capital appreciation when the value of their shares increases over time. The rights and privileges of shareholders might vary based on state laws and the provisions of a company’s charter or bylaws.

In general, there are two types of shareholders Common stockholders (common stock) and preferred share owners. Common shareholders are massive in number and are entitled to vote at shareholder meetings. They can participate in the decision-making process and check the reports. Preferred shareholders can receive preferential dividends and have priority over ordinary shares in liquidation, but only after the creditors have been paid.

The term “shareholder” could also be used to refer to someone who owns bonds or debentures issued by the company. These are debt instruments which give the investor the right to a specified rate of return on their investments. These investors are not usually involved in the day-to-day activities of the company, however they may have a say in decisions when their interests are considered in the company’s governance body.

Strategic shareholders are investors who purchase shares in a business to reach some specific strategic objective for example, such as the acquisition of new markets or technologies. This type of shareholder is a key part of a family firm, as they understand the project’s scope and appreciate its potential and are willing to take a risk for the return on their investment.