What Is a Shareholder?

A shareholder is a person, company, or institution that owns at least one share of a company’s stock or a share of a 澳洲幸运5开奖号码历史查询:mutual fund. Shareholders essentially own the company and this comes with the right t🤪o share in the profitsꦅ.

Shareholders benefit from increased 澳洲幸运5开奖号码历史查询:stock valuations or profits distributed as 澳洲幸运5开奖号码历史查询:dividends when the company is successful. They also have 🌠the right to participate in corporate elections. They can lose money as well, however, when the company does and share prices drop. Shareholders can clai✤m any remaining assets after the company's debts are paid if the company fails.

Understanding Shareholders

A shareholder is an entity that owns one orꦦ more shares in a company’s stock or a mutual fund. Shareholders are also often called stockholders. Being a shareholder comes with certain rights and responsibilities. A shareholder is also permitted to vote on certain issues that af♉fect the company or the fund in which they hold shares along with sharing in its overall financial success.

A single shareholder who owns and controls more than 50% of a company’s 澳洲幸运5开奖号码历史查询:outstanding shares is r🔜eferred to as a majority shareholder. Those who hold less than 50% of a company’s stock are classified as minority sha♑reholders.

Most majority shareholders are company founders. 澳洲幸运5开奖号码历史查询:Majority shareholders are frequently related to company founders in older, more established firms. They wield considerable power to influence critical operational decisions when they control more than half the voting interest. These issues include replacing board members and C-level executives like 澳洲幸运5开奖号码历史查询:chief executive officers (CEOs). Many compan💫ies often avoid ℱhaving majority shareholders among their ranks for this reason.

Corporate shareholders aren't personally liable for the company’s debts and other financial obligations. Its creditors can't target a shareholder’s personal assets if the company becomes 澳洲幸运5开奖号码历史查询:insolvent.

Rights and Responsibilities

Being a shareholder comes with certain rights and respon🌄sibꦚilities as well as tax implications.

Shareholder Rights

Shareholders traditionally enjoy the following rights according to a corporation’s charter and bylaws:🍎

• The right to inspect the company’s books and records
• The power to sue the corporation for the misdeeds of its directors and/or officers
• The right to vote on key corporate matters such as naming board directors and deciding whether to green-light potential mergers
• The entitlement to receive dividends if the board decides to pay them although not all companies do
• The right to attend annual meetings either in person or via conference calls
• The right to vote on critical matters by proxy either through mail-in ballots or online voting platforms if they’re unable to attend voting meetings in person
• The right to claim a proportionate allocation of proceeds if a company 澳洲幸运5开奖号码历史查询:liquidates its assets

Shareholders and 🎃the Internal Revenue Service (IRS)

Any gains or losses you realize when selling shares must be reported on your personal income tax return if you're a shareholder. Gains would contribute to your taxable income and losses will be deducted from your taxable income. Any dividends paid to shareholders are also taxable income.

An 澳洲幸运5开奖号码历史查询:S corporation is a💖nother type of corporation with different tax treatment. These corporations are typically small to midsize businesses that have fewer than 100 shareholders. The S corporation differs from a regular corporation in tha𝐆t it passes taxation through to its shareholders rather than double the taxation.

This stands in contrast to shareholders of 澳洲幸运5开奖号码历史查询:C corporations. Profits within this business structure are taxed at the corporate level and again at the personal level for shareholders.

Shareholders incur ♏taxable capital gains or losses when selling shares, however, jus♈t as with shares of a regular corporation.

“Shareholders of S corporations report the flow-through of income and losses on their personal tax returns and are assessed tax at their individual income tax rates. This allows S corporations to avoid double taxation on corporate income. S corporations are responsible for tax on certain built-in gains and passive income at the entity level," according to the 澳洲幸运5开奖号码历史查询:Internal Revenue Service (IRS).

Types of Shareholders

Many companies issue two types of stock: 澳洲幸运5开奖号码历史查询:common and preferred. Common stock is more prevalent than preferred stock and 🍎it's what ordinary investors typicallꦍy buy in the stock market.

Common stockholders generally enjoy voting rights but preferred stockholdeꦚrs do not. Preferred stockholders have a priority claim to dividends, however, and the dividends paid to preferred stockholders are fixed even if profits decline. Common stock dividends may decline or not b🅰e paid at all during periods of poor corporate performance.

Some companies further divide their share issues into separate classes with different voting rights. A share in a company's Class A stock might come with 10 votes while Class B shares might have only one vote. There are no hard rules but Class A shares tend to have the highest voting power.

The Bottom Line

Shareholders or stockholders are the owners of a corporation. Shareholders can receive profits in the share of dividends or sell their shares in the market for a profit. They can also participate in corporate elections. Anyone can become a shareholder by buying stock in that compa🙈ny. Corporations may also offer employee stock options as a benefit for workers in many countries.

S💟hareholders assume a level of risk. Common sharehol꧅ders are last in line for repayment if a company goes bankrupt. Shareholders can lose their entire investment in some cases.