A shareholder is an individual or an entity that holds shares in a company and thus has the right to take part in major company decisions. They also earn money by gaining value on their portfolio or dividend payments. The rights and duties of shareholders are based on the number of shares they own and they may be separated into categories like minority and majority shareholders.
The person who owns more than 50% of a business’s shares is a majority shareholder. It is typically the founders, but can also be a company that purchases more than 50 percent of shares of the business. A majority shareholder has the power to vote on important decisions, and can choose who sits on a company’s board. They also have the right to bring lawsuits against an organization for any wrongdoing that was committed by it.
If you own more than 25 percent of the shares of the company that means you’re a minority stockholder. You have the right to vote on important company decisions however you don’t have much control over it. Minority shareholders can still sue the company for any mistakes it has committed, but they do not have the same authority as the majority shareholders.
There are two types of shareholders in a company: preferred shareholders and common shareholders. Both have the ability to vote on crucial decision-making, and both can decide who will be on the board of directors. However, the type you own determines the voting rights. Common shareholders have the greatest number of votes and are entitled to receive dividends when the business makes a profit during the year, but they do not get a guaranteed rate of dividend payment as preferred shareholders do.