Shareholder
Definition
An individual or institution that legally owns one or more shares of the share capital of a public or private corporation.
Deep Dive
A shareholder is an individual or institution that legally owns one or more shares of the share capital of a public or private corporation, thereby becoming a partial owner of that company. This ownership grants them certain rights, which typically include the right to vote on major corporate decisions (like electing the board of directors or approving significant mergers), the right to receive dividends if declared, and a residual claim on the company's assets in the event of liquidation, after all creditors have been paid. Share ownership can come in various forms, such as common shares (which typically carry voting rights) or preferred shares (which often have priority for dividends but may lack voting rights).
Examples & Use Cases
- 1An individual investor purchases 100 shares of Microsoft stock through an online brokerage account, making them a shareholder
- 2A venture capital firm holds a 20% stake in a privately-held startup, granting them significant voting rights and a seat on the board
- 3An employee receives stock options as part of their compensation package, and upon exercising them, becomes a shareholder in their company.