The Different Types of Shareholders in a Business

The various kinds of shareholders in a business are the individuals or institutions who hold shares of a company’s stock. Shareholders have different legal rights that allow them to vote on corporate matters, receive dividends and have an interest in the company’s assets when liquidating. Companies of all sizes and sectors offer a range of products and services. For example, Amazon sells a variety of items ranging from books to kitchen appliances, and Apple is known for its unique electronic devices like personal computers, smartphones, earphones and watches.

Generally there are two types of shareholders: preferred and common. Common stock holders enjoy a partial ownership of the company and have voting rights and a share of profits (if there is any). Typically, this kind of stock has higher rates of return over a long period but may not guarantee the exact amount of a dividend each year. Common stockholders also have the option to inspect the records of a company, such as the minutes of meetings and shareholder registers.

Preferred shareholders are guaranteed a yearly dividend, in addition to having an advantage over common stockholders should they liquidate the company’s assets. They are not able to vote on board members or other policies of the company. The term «shareholder» could be used interchangeably with the phrase «stakeholder,» but stakeholder is a broad term that includes employees, customers and local communities, while shareholders directly invest in the profitability of a company.

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