Types of Shareholders in a Business
A shareholder is a person or company that holds shares of the business. They can vote on major decisions taken by the company. They also earn money by gaining value on their portfolio or from dividend payments. The rights and duties of shareholders are based on the amount of shares they hold, and they are able to be divided into categories such as majority and minority shareholders.
A majority shareholder is a person who has more than 50 percent of the shares of a company. It is typically the founders, but it could also be an entity that buys more than 50 percent of the shares in the business. A majority shareholder can make crucial decisions and decide the members of the company’s board. They are also able to file lawsuits for any wrongdoing of an organization.
You are considered a minority shareholder when you have more than 25% of the shares in the company. You have the right to vote on important company decisions but you don’t have any control over it. Minority shareholders have the ability to sue the company in the event that it commits any wrongdoing, but they don’t have the same power as majority shareholders.
There are two kinds of shareholders in a business which are called common shareholders and preferred shareholders. Both have the ability to vote on crucial decisions, and they also have the ability to decide who is on the board of directors. However the type of shareholder you have determines the voting rights. Common shareholders are those with the highest number of votes, and they receive dividends if there’s a profit for the fiscal year. However they don’t receive the same guaranteed dividend as preferred shareholders.
