Shareholders are the individuals, companies or institutions that invest in a company by buying shares. They provide the business with security in the financial aspect and take some of the profits. Their influence in the company generally reflects the percentage of shares they own, with majority shareholders holding more than half and minority shareholders holding less than half.
There are many reasons an individual might decide to become a shareholder of any private or public company. Whether it is to increase their investment portfolio or gain an awareness of ownership and responsibility, being shareholder comes with its own unique set of rights and obligations.
Generally speaking, shareholders have the right to access key information, such as the financial statements and reports of the company. They are also able to vote on important matters for the company, including the appointment of new directors as well as major corporate decisions and mergers. Based on the company’s constitution or agreement, shareholders could also be entitled to other rights such as appraisal of their shares in the case of liquidation.
However, unlike the owners of a sole proprietorship or partnership, shareholders are not personally responsible for the company’s debts as well as other financial obligations. This means that they are able to often sell their shares to a different party without risking their personal assets.
