Shareholders are people who hold shares in the company, and profit from the company’s success. One can be a shareholder in a private or public business, and can invest in a number of different ways.
A shareholder can sell their shares to an investor to earn a profit. If a business’s profits grow then the value of the shares will rise as well and is referred to as capital gains. Shareholders are individuals, legal entities or members of a corporation.
There are various kinds of shareholders in a company and the type they own determines their rights and privileges. For example, some shares are entitled to vote, whereas others do not. Additionally, certain types of shares enjoy a certain preference over other classes in dividend payments. These rights are defined in the charter or bylaws of the company and state laws.
Common preferred, institutional and other types are the primary types of shareholders. Common shareholders are the individuals who own the company’s common stock and enjoy the right to vote on corporate issues and business decisions. They also get dividend payments that are based on the profits of a company. Preferred shareholders have priority over ordinary shareholders in dividend distribution. They also have a higher claim on assets if the company is liquidated. Institutional shareholders are large companies like pension funds, hedge funds and mutual funds that hold significant stakes in a company.
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