Types of Shareholders in a Business

A shareholder is a person, or company that holds shares of the business. They have the ability to vote on major decisions taken by the company. They also make money through the growth of their share portfolio or from dividend payments made by the business. Shareholders’ rights and responsibilities are determined by the number of shares they own. They can be divided into categories like minorities and majority.

Someone who holds more than 50% of a business’s shares is a majority shareholder. It is typically the company’s founders but it could be another company that purchases more than 50% of the company’s shares. A majority shareholder has the power to vote on key decisions and also decide who is on the company’s board. They may also file lawsuits for any wrongdoing by an organization.

If you own over 25 percent of the shares of the company that means you’re a minority stockholder. You are entitled to vote on key decisions but don’t have a lot of power over the company. Minority shareholders have the ability to sue the company if it is found guilty of any wrongdoing, but they don’t have the same authority as majority shareholders.

There are two broad types of shareholders in a business which are called common shareholders and preferred shareholders. Both can vote on important decisions, and can choose who will sit on the board of directors. However the type of share you own determines the voting rights. Common shareholders have the greatest number of votes and are entitled to receive dividends if the company earns a profit in the fiscal year, however, they don’t receive a guaranteed rate of dividends as preferred shareholders do.

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