A shareholder is a person, or a company who holds a portion of the ownership of a business through the purchase of shares in the market for stocks. The shareholders receive rewards when the company succeeds in enhancing its stock valuation and financial returns in the form of dividends. Shareholders do not have to personally be responsible for the obligations or debts of the company, however they are taking an investment risk when see this site they invest.
Shareholders can be divided into two broad categories: those who hold common shares and those who hold preferred shares. Companies can also break them down further into class and have different rights attached to each class of shares.
Common shares are typically given to employees as a part of their salary with the holders gaining voting rights on matters that affect the business, and also receiving dividends from the company’s profits. When it comes to the right of assets in a company liquidation, they are ranked behind preference shareholders.
The preferred shareholders are not able to be part of management decisions. The dividend rate isn’t fixed and will change depending on the financial health of the company during any particular year. They are also paid prior the common share is sold in the event of a company’s liquidation. It is also possible for shareholders to be granted many other rights, such as the right to a preferential dividend, a special dividend or no dividend at all.