The Different Types of Shareholders in a Business

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The different kinds of shareholders in a firm are either individuals or institutions that hold shares of a company’s stock. Shareholders are entitled to many legal rights which include the right to vote in corporate matters, receive dividends, and be able to claim assets in liquidation. Businesses of all sizes and industries provide a wide range 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 gadgets like personal computers, smartphones headphones, and watches.

In general there are two types of shareholders: common and preferred. Common stock holders enjoy a partial ownership in the company and are entitled to voting rights and a portion of the profits (if they have any). This type of share generally offers higher returns over the long run, but it may not guarantee a dividend every year. Common stockholders also have the ability to check a company’s records including shareholder registers and meeting minutes.

Preferred shareholders receive a guaranteed annual dividend and are entitled to precedence over other stockholders the case of liquidating assets. However, they are not allowed to vote on board members and other policies of the company. The term “shareholders” is synonymous with “stakeholders,” but stakeholders are a broad term which includes employees and customers as well as suppliers and local communities. Shareholders directly invest in the success of a company.