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What are Company Shareholders?

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  • Written By: Mary McMahon
  • Edited By: Kristen Osborne
  • Last Modified Date: 01 May 2018
  • Copyright Protected:
    2003-2018
    Conjecture Corporation
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Company shareholders are people who hold shares, also known as stock, in a company. Shareholders are entitled to part of the company's revenues and the company must be run with their interests in mind. They also have input into some business decisions made by the company and in some cases, can be considered to have responsibilities to each other, usually in the case of majority shareholders who could damage other shareholders with their actions. The number of people who hold shares in a company can vary, depending on how it is organized.

In addition to individuals, entities like organizations and other companies can also own shares. Also known as stockholders, shareholders can receive revenues in the form of dividends. In the event that a company liquidates, after its creditors are paid off, the shareholders receive any remaining assets. Assets are divided on the bases of the percentage of shares held by individual company shareholders. People and organizations with more shares get a bigger chunk of the liquidated assets.

Companies use shareholders to raise capital. Shares cost money, and by selling shares, companies can increase the amount of money they have available to work with. Offerings of shares are made when companies need funds for projects and other endeavors and companies can issue multiple rounds of shares as they need funding. Companies usually control, to some extent, the distribution of their shares to reduce the risks of a hostile takeover.

Company shareholders are allowed to vote for members of the board and can participate in ousters to remove members of the board who do not appear to be serving their interests. In addition, they can introduce resolutions to demand that a company take a particular action. While the members of the board make most of the business decisions, they do so with input from company shareholders and in awareness that if they go against the will of shareholders, they may be removed from office.

A majority shareholder controls more than half of the outstanding shares issued by a company. Majority shareholders have the power to determine the outcome of elections and other events involving shareholder votes because they control the majority of the vote. It is possible for a company to have no majority shareholder, although minority company shareholders can band together to control a block of shares large enough to control the outcome of votes. This can make a company vulnerable to activities like takeovers.

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