A shareholder is a person or an entity that holds shares in a company and therefore has the ability to vote on major company decisions. They also make money through the growth of their share portfolio or through dividends paid by the business. Shareholders’ rights and duties are determined by the number of shares they hold. They can be divided into categories such as majorities and minorities.
Someone who holds more than 50% of a business’s shares is a majority shareholders. This is usually the founders of a company but it could be a different company that buys over 50% of the company’s shares. A majority shareholder is entitled to vote on major decisions and also decide the members of a company’s board. They are also able to file lawsuits for any wrongdoing by the company.
If you own more than 25% of the company’s shares you’re a minority shareholder. You can vote on important company decisions however, you don’t have much control over them. Minority shareholders have the ability to sue the company if it is found guilty of any wrongdoing, however they don’t have as much power as the majority shareholders.
There are two types of shareholders preferred and common shareholders. Both are entitled to vote on key decisions and choose who is on the board of directors, however the type of shares you own determines your voting rights. Common shareholders are specific business niche those with the most votes, and they also receive dividends if they earn a profit during the fiscal year. However they don’t get the same guaranteed dividend as preferred shareholders.