The Different Types of Shareholders in a Business

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Institutions or individuals who hold shares in a company are the various types of shareholders. Shareholders are entitled to many legal rights such as the right to vote on corporate matters, receive dividends and claim assets in a liquidation. Businesses of all sizes and industries offer a variety of products and services. For example, Amazon sells a variety of items from books to kitchen appliances, while Apple is famous for its unique electronic devices such as personal computers, smartphones as well as earphones, watches and other gadgets.

Generally there are two types of shareholders: preferred and common. Anyone who owns common stock is an ownership share in the company This means they are entitled to voting rights and an element of the company’s earnings (if there is profit). Typically, this kind of share has higher rates of return over the long term but may not guarantee a specific yearly dividend. Common stockholders have the right to inspect company records, such as shareholder lists and minutes of meetings.

Preferred shareholders receive an annual dividend that is guaranteed and are entitled to the upper hand over other stockholders in the event of liquidating assets. They are not able to vote on the board members or any other company policies. The term “shareholders” is synonymous with “stakeholders,” but stakeholders are a broad term that includes employees and customers as well as local communities and suppliers. Shareholders are directly invested in the performance of a business.