stockholder

A stockholder, also known as a shareholder, is an individual or institution that owns shares of stock in a corporation. Ownership represents a claim on a portion of the company’s equity and, in many cases, a stake in its future profits and assets. Stockholders are not typically involved in daily management, but they have certain rights and potential benefits tied to their ownership.

Key rights include the ability to vote on important corporate matters, such as electing the board of directors, approving major corporate actions (mergers, acquisitions, amendments to bylaws), and sometimes approving executive compensation. They may also receive dividends if the company declares them and have a residual claim on assets after creditors and any preferred stockholders in the event of liquidation. In many jurisdictions, stockholders have rights to information about the company’s performance, typically through annual reports and financial statements.

There are different classes of stock. Common stock usually provides voting rights and a residual claim on dividends and assets, with dividends and share value fluctuating with company performance. Preferred stock generally offers priority for dividends and liquidation proceeds but may carry limited or no voting rights.

Stock is generally transferable, providing liquidity for public companies via stock markets. In private companies, transfers may be restricted by agreements or company bylaws. Stockholders incur the risk of loss of investment due to share price declines or company underperformance, while potential gains come from price appreciation and dividends. Liability is typically limited to the amount invested.

The terms stockholder and shareholder are often used interchangeably, though usage varies by region.