A shareholder is a person or a company who owns shares in an organization. They can be a part of major decisions made by the company. They also can earn money through the growth of their share portfolio or from dividend payments made by the business. Shareholders’ rights and obligations are determined by the number of shares they own. They can be classified into categories such as minorities and majority.
A person who owns over 50% of a business’s shares is considered to be a majority shareholder. It is typically the company’s founders but it could be another organisation that buys more than 50% of the business’s shares. A majority shareholder is entitled to vote on major decisions, and may choose who is on the company’s board. They also have the ability to sue an organization for any wrongdoing committed by it.
You are considered a minority shareholder when you have more than 25 percent of the shares in the company. You can vote on important company decisions, but you types of shareholders in a business don’t have much control over them. Minority shareholders are still able to take action against the company for wrongdoings they have committed, but they don’t have the same amount of control as the majority shareholders.
There are two types of shareholders preferred and common shareholders. Both are entitled to vote on major decisions and choose who is on the board of directors, however the type of shares you hold determines your voting rights. Common shareholders are those who have the most votes and they are paid dividends when there is a profit in the financial year. However they don’t receive an assured dividend rate as do preferred shareholders.