Types of Shareholders in a Business

Shareholders are the individuals or organizations who invest funds in a company through the purchase of shares of stock. They earn a profit or lose money on their investment based on performance of the company as well as its ability to pay dividends. They also gain from the possibility of capital appreciation. This happens when the value of the shares increases in value over time. Shareholder rights and privileges are varying depending on state law and a company’s charter, or bylaws.

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

The term «shareholder» may be used to refer to someone who holds bonds or debentures issued by the company, which are debt instruments which give the investor the right to an agreed-upon rate of return on their investments. These investors are not usually active in the day-to-day operations of the business, however they can have a say in the company’s decisions if their interests are considered in the company’s governing body.

Strategic shareholders are investors who buy shares in a company to accomplish a specific strategic goal that includes acquiring new technologies or markets. This type of shareholder plays a vital role in a family-owned company, since they understand the scope of the project and its potential, and are willing and capable of taking risks for the benefit you can find out more of their investment.

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