Types of Shareholders in a Business
Shareholders are the individuals or organizations who invest money in a company through the purchase of shares of stock. They can earn a profit, or lose money on their investment based on performance of the company and its ability to pay dividends. They can also benefit from capital appreciation, in which the value of their shares grows over time. Shareholders' rights and privileges can vary depending on the state's law the company charter or bylaws.
In general there are two kinds of shareholders: common stockholders (common stock) and preferred share owners. Common shareholders are huge in number and are entitled to vote at shareholder meetings. They can review reports and be part of the decision-making process. The shareholders who are preferred get preferential dividends and have priority over ordinary shares in liquidation, but only after the creditors have been paid.
The term "shareholder" may also be used to describe a person who owns debentures or bonds issued by the company, which are debt instruments that grant investors the right to an agreed-upon rate of return on their investments. These investors aren't usually involved in the day-today operations of the company, but they can have a say in the decisions made when their interests are reflected in the company's governing body.
Strategic shareholders are investors who purchase shares in a company to accomplish some specific strategic objective for example, such as the acquisition of new business local seo technologies or markets. This kind of shareholder plays a vital role in a family-owned company, since they understand the scope of the project and its potential, and are willing and able to take risks for the potential return on their investment.
