A shareholder is an individual or entity that owns shares in a company and can therefore vote on major company decisions. They also earn money by gaining value on their portfolio or by making dividend payments. Shareholders’ rights and obligations are determined by the number of shares they own. They can be classified into categories, such as majority and minorities.
A person who owns over 50% of a business’s shares is considered to be a majority shareholder. It is usually the founders, but it could also be an organization which purchases more than 50% of the shares of an enterprise. A majority shareholder has the right to vote on important decisions, and may choose who sits on the company’s board. They also have the ability to bring lawsuits against the company for any wrongdoing done by it.
If you own more than 25 percent of the shares of the company, you’re a minority shareholder. You are able to vote on key company decisions however you don’t have a lot of influence over it. Minority shareholders can still bring a lawsuit against the company over wrongdoings it has committed, but they don’t have as much control as the majority shareholders.
There are two types of shareholders in a business: preferred shareholders and common shareholders. Both have the ability to vote on major decisions and also decide who is on the company’s board, but the type of shares you own determines your voting rights. Common shareholders have the most number of votes and are entitled to receive dividends if the business earns profits for the financial year, however they do not receive an assured rate of dividends like preferred shareholders do.