Types of Shareholders in a Business

A shareholder is an individual or a company that holds shares in a company and is therefore able to be a vote-taker in major company decisions. They can also earn a profit from the appreciation of their share portfolio or by receiving dividends from businesses. The rights and duties of shareholders are determined by the amount of shares they have, and they may be classified into categories such as majority and minority shareholders.

The person who owns more than 50% of a business's shares is known as a majority shareholder. It is usually the founders, but it could also be an organisation that purchases more than 50% of the shares of a business. A majority shareholder can vote on key decisions and decide who sits on the company's board. They can also file lawsuits for any wrongdoing by a company.

If you own over 25 percent of the company's shares that means you're a minority stockholder. You can vote on important company decisions however you don't have much control over it. Minority shareholders have the ability to sue the company in the event that they commit any wrongdoing however they don't have the same power as majority shareholders.

There are two broad types of shareholders in a company that are common shareholders and companylisting.info/2021/04/06/understanding-types-of-companies/ preferred shareholders. Both have the ability to vote on crucial decisions, and they can decide who will be on the board of directors. However, the type you own determines the voting rights. Common shareholders are those who have the most votes and they receive dividends if there is a profit in the fiscal year. However they don't have the same guaranteed dividend as preferred shareholders.