Business, Legal & Accounting Glossary
An owner of a corporation whose ownership interest is represented by shares of stock in the corporation. A shareholder — also called a stockholder — has rights conferred by state law, by the bylaws of the corporation and, if one has been adopted, by a shareholder’ s agreement (often called a buy-sell agreement). These include the right to be notified of annual shareholders’ meetings, to elect directors and to receive an appropriate share of any dividends. In large corporations, shareholders are usually investors whose shares are held in the name of their broker. On the other hand, in incorporated small businesses, owners often wear many hats — shareholder, director, officer and employee — with the result that distinctions between these legal categories become fuzzy.
A shareholder is an individual or institution that legally owns one or more shares of stock in a public or private corporation. Shareholders may be referred to as members of a corporation.
Typical shareholders have limited influence over publicly traded companies beyond voting for the Board of Directors. Shareholders who hold large percentages of a company must meet additional regulatory requirements, such as publicly reporting the extent of their holdings. Shareholders who are also company insiders are required to file public disclosures whenever they wish to increase or decrease their holdings.
A shareholder or stockholder is an individual or company (including a corporation), that legally owns one or more shares of stock in a joint-stock company. Companies listed in the stock market strive to enhance shareholder value. Stockholders are granted special privileges depending on the class of stock, including the right to vote (usually one vote per share owned) on matters such as elections to the board of directors, the right to share in distributions of the company’s income, the right to purchase new shares issued by the company, and the right to a company’s assets during a liquidation of the company. However, stockholder’s rights to a company’s assets are subordinate to the rights of the company’s creditors. This means that stockholders typically receive nothing if a company is liquidated after bankruptcy, although a stock may have value after bankruptcy if there is the possibility that the debts of the company will be restructured.
Stockholders or shareholders are considered by some to be a partial subset of stakeholders, which may include anyone who has a direct or indirect equity interest in the business entity or someone with even a non-pecuniary interest in a non-profit organization. Thus it might be common to call volunteer contributors to an association, such as a hypothetical online open-content encyclopedia, stakeholders, even though they are not shareholders.
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This glossary post was last updated: 23rd April, 2020 | 5 Views.