A shareholder is any person, firm or institution that holds shares in a corporation. Through the ownership of shares holders are granted the right to claim a percentage of the company’s equity and earnings, usually through dividend payments. The ownership of shares allows them to vote on important corporate decisions. Voting rights are generally proportional to the number of shares held. The legal rights and obligations of shareholders may vary based on a specific company’s constitution or shareholder agreement, therefore it’s important to research these documents carefully before investing in shares.
The owners of large quantities of common stock could have a significant impact on the direction of a company, and might be able negotiate with other companies about potential acquisitions. They are also able to nominate and appoint board members, and vote for important issues like whether a merger will be approved or not.
Another major function of shareholders is their right to sue the company for wrongdoing. As the owners of the shares, shareholders have the right to view financial documents including the company’s books and documents, and are allowed to pursue legal action for wrongdoing actions committed by the company’s board members, as well as executive officers.
Stakeholders include those who have an interest in the performance or failure of a company. For example, employees who want to see their salaries rise as well as suppliers who are seeking stability in their client base and customers who are looking for high-quality products and services. Non-financial stakeholders might include the larger community that benefits from or suffers from the company’s operations like local economies and politicians whose campaign depend on economic success and tax revenue for cities that is often dependent on business activity.
Add a Comment