Shareholder

Shareholder

A shareholder or stockholder is an individual or institution (including a corporation) that legally owns one or more shares of the share capital of a public or private corporation. Shareholders may be referred to as members of a corporation. Legally, a person is not a shareholder in a corporation until their name and other details are entered in the corporation's register of shareholders or members.

Share Ownership

The influence of a shareholder on the business is determined by the share ownership structure of the corporation. In small, privately held companies, a shareholder may also serve as a director or officer. In public companies, shareholders are usually not involved in day-to-day operations, but they have the power to elect the board of directors.

Rights of Shareholders

Shareholders have certain rights as part of their ownership. These may include:

• The right to sell their shares.
• The right to vote on the directors nominated by the board.
• The right to nominate directors and propose shareholder resolutions.
• The right to dividends if they are declared.
• The right to purchase new shares issued by the company.
• The right to what assets remain after a liquidation.

Shareholder Activism

Shareholder activism is a way that shareholders can influence a corporation's behavior by exercising their rights as owners. Though shareholders do not run a company, there are ways for them to influence the board of directors and management.

Types of Shareholders

There are two types of shareholders:

• Individual/retail shareholders: Individual shareholders own shares for personal and private reasons.
• Institutional shareholders: Institutional shareholders are organizations that own shares for investment purposes.

See Also

• Stock Market
• Corporate Governance
• Dividend
• Equity (finance)