Shareholder

Legal owner of shares in a corporation.

A shareholder, also referred to as a stockholder in the United States, is an individual or legal entity registered by a corporation as the legal owner of shares of the corporation's share capital. Shareholders may be individuals, other corporations, bodies politic, trusts, or partnerships, and they exist in both public and private corporations. Their influence on a business is determined by the percentage of shareholding they own, and they are generally not liable for the corporation's debts beyond the unpaid share price.

Quick Facts

Field

Corporate law and finance

Known for

Ownership of shares in corporations
limited liability
and voting rights

Types

Beneficial
nominee
ordinary
preference
institutional

Facts from the source article.

Lore & Background

A person or legal entity becomes a shareholder when they acquire shares and their name is entered in the corporation's register of shareholders. The corporation generally cannot own its own shares and is not required to record beneficial ownership, only the registered owner. When more than one person is on the record, the first named controls the shareholding and receives all corporate communications. Shareholders may acquire shares in the primary market through IPOs, providing capital to the corporation, but most acquire shares in the secondary market, providing no direct capital.

Reader's Guide

Shareholders are fundamental to corporate structure, as they are the legal owners of a corporation's share capital and their rights include selling shares, voting on directors and mergers, receiving dividends, and accessing certain information. The board of directors generally governs the corporation for the benefit of shareholders. Different types of shareholders exist: beneficial shareholders have the economic benefit of ownership; nominee shareholders appear on the register but act for the beneficial owner; ordinary shareholders typically have voting rights; preference shareholders receive fixed dividends before ordinary shareholders but usually lack voting rights; and institutional shareholders, such as pension funds and mutual funds, often hold significant stakes and can exert greater influence over corporate governance through voting and direct engagement with management. The role of institutional shareholders has become important in discussions of corporate governance, shareholder activism, and proxy voting.