Types of Shareholders in a Business

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

A person who holds over 50% of a business’s shares is considered to be a majority shareholder. This is usually the founders of a company but it could also be another company that purchases more than 50% of the company’s shares. A majority shareholder is able to vote on important decisions and select who sits on the board. They are you can find out more also able to file lawsuits if they believe that there was wrongdoing done by the company.

You are considered a minority shareholder when you own more than 25 percent of the shares in the company. You are entitled to vote on key decisions, but you don’t have a lot of control over the company. Minority shareholders may still sue the company for any wrongdoings it has committed, but they don’t have the same control over the company as the majority shareholders.

There are two types of shareholders: common shareholders and preferential shareholders. Both have the right to vote on key decisions and also decide who sits in the company’s board, but the kind of shares you own determines your voting rights. Common shareholders have the highest amount of votes. They also are entitled to receive dividends when the business earns profits during the year, however they do not receive a guaranteed rate of dividends like preferred shareholders do.