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Shareholder

society Maturity 11-13 Next article →

A shareholder is someone who owns a part of a company. In the United States, people often call them stockholders. A shareholder can be a single person. It can also be a legal entity like a trust or another corporation. Both private companies and public companies have these owners. When someone buys shares, their name goes into a special register. This register shows who the legal owner is.

Owning shares gives people different kinds of power. The amount of influence a person has depends on their shareholding percentage. Most companies have a board of directors. This group of people governs the company for the shareholders. Shareholders can have many different rights. They might have the right to sell their shares. They can also vote on big changes like mergers. Some can even vote on how much managers are paid.

There are different types of shareholders. Ordinary shareholders are the most common type. In the United States, these are called common stock owners. They can vote in meetings to help make decisions. They can also file class action lawsuits if needed. Another type is the preference shareholder. These owners hold preference shares, or preferred stock. They get paid a set amount called a dividend. This payment happens before ordinary shareholders get theirs. However, they usually do not get to vote.

Sometimes, the person on the paper is not the real owner. A beneficial shareholder is the person who gets the economic benefit. A nominee shareholder is the person listed on the company register. The nominee acts for the beneficial owner. In most places, this is managed by trust law. This means the nominee just follows specific instructions. In China, this can be much more complex. There, nominee rules are handled by contract law. This can be risky for the person acting as the nominee.

Shareholders are separate from the company itself. This is a very important rule. It means they are not responsible for the company's debts. If a company owes money, the shareholders do not have to pay it back from their own pockets. Their risk is usually limited to the money they used to buy the shares. Some people also call shareholders "stakeholders." This is because they have a direct interest in the business. Other stakeholders might be the employees or the customers.

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