A shareholder is an individual or a company that holds shares in a business and is therefore able to vote on major corporate decisions. They also can earn money from the growth of their share portfolio or through dividends paid by a business. The rights and obligations of shareholders are determined by 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 owns more than 50% of the shares of a company. It is typically the company’s founders, but it can also be a different company that buys more than 50% of the business’s shares. A majority shareholder has the right to vote on key decisions and also decide who is on the company’s board. They also have the option of filing lawsuits if they believe that there was wrongdoing done by the company.
You are considered a minority shareholder when you hold more than 25 percent of the shares in the company. You are entitled to vote on important decisions but do not have a lot of influence over the company. Minority shareholders are still able to sue the company for any wrongdoings they’ve committed, however they do not have the same authority as the majority shareholders.
There are two types of shareholders in a business such as common shareholders and preferred shareholders. Both have the right to vote on major decisions and select who is on the board, but the kind of shares you own determines your voting rights. Common shareholders have the highest amount of votes and are entitled to receive dividends when the company earns a profit for the financial year, but they don’t get a guaranteed rate of dividend payment as preferred shareholders do.