shareholder

A shareholder, also called a stockholder, is a person or organization that owns shares in a corporation or other form of business entity. Ownership is evidenced by share certificates or electronic records and represents a claim on a portion of the company’s equity and, in some cases, its profits and assets. Shareholders may own one or many shares and can be individual investors, institutional investors, or other companies. In public companies, ownership is typically widely dispersed, while in private companies it can be concentrated.

Shareholders have certain rights. They typically may vote at annual or special meetings, including electing the board of directors, approving major corporate actions, and amending governing documents. They may receive dividends when declared and have rights to a share of remaining assets if the company is liquidated. They are entitled to information such as annual reports and meeting notices. In many jurisdictions, shareholders have preemptive rights to maintain their percentage ownership when new shares are issued.

There are different types of shareholders. Common (ordinary) shareholders usually have voting rights and a residual claim on profits; preferred shareholders generally receive fixed dividends and priority in liquidation but often lack voting rights. Shareholders can be individuals or entities; majority or controlling shareholders can exert significant influence over management and strategy.

Shareholders’ relationship to the company includes limited liability: their losses typically are limited to the amount invested. They participate in governance mainly through the board rather than direct day-to-day management. Ownership can be traded on securities exchanges, providing liquidity and market-driven valuation.