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The Different Types of Shareholders in a Business
The different kinds of shareholders in a business are the individuals or institutions who hold shares of a company’s stock. Shareholders have a variety of legal rights which allow them to vote on corporate matters and receive dividends, as well as rights to the company’s assets in the event of liquidation. Businesses of all sizes and industries offer a variety of products and services. For example, Amazon sells a variety of products from books to kitchen appliances, while Apple is renowned for its innovative electronic gadgets such as smartphones, personal computers or earphones.
In general, there are two kinds of shareholders: common and preferred. Common stock holders enjoy a partial ownership in the company and have voting rights and a portion of the profits (if there is any). In general, this type of stock has higher rates of return over the long-term however, it is not guaranteed the exact amount of a dividend each year. Common stockholders also have the ability to examine the company’s records, such as the minutes of meetings and shareholder registers.
Preferred shareholders are guaranteed a annual dividend, and they also have priority over common stockholders should they liquidate the company’s assets. They are unable to vote for the board members or any other company policies. The term “shareholders” is synonymous with “stakeholders,” but stakeholders have a broader meaning that includes employees and customers as well as suppliers and local communities. Shareholders are directly invested in the success of a company.
