A shareholder (in the United States often referred to as stockholder) of a corporation is an individual or legal entity (such as another corporation, a body politic, a trust or partnership) that is registered by the corporation as the legal owner of shares of the share capital of a public or private corporation. Shareholders may be referred to as members of a corporation. A person or legal entity becomes a shareholder in a corporation when their name and other details are entered in the corporation's register of shareholders or members,[1] and unless required by law the corporation is not required or permitted to enquire as to the beneficial ownership of the shares. A corporation generally cannot own shares of itself.[2]
The influence of a shareholder on the business is determined by the shareholding percentage owned. Shareholders of a corporation are legally separate from the corporation itself. They are generally not liable for the corporation's debts, and the shareholders' liability for company debts is said to be limited to the unpaid share price unless a shareholder has offered guarantees. The corporation is not required to record the beneficial ownership of a shareholding, only the owner as recorded on the register. When more than one person is on the record as owners of a shareholding, the first one on the record is taken to control the shareholding, and all correspondence and communication by the company will be with that person.[clarification needed]
Shareholders may have acquired their shares in the primary market by subscribing to the IPOs and thus provided capital to the corporation. However, most shareholders acquire shares in the secondary market and provided no capital directly to the corporation. Shareholders may be granted special privileges depending on a share class. The board of directors of a corporation generally governs a corporation for the benefit of shareholders.
A beneficial shareholder is the person or legal entity that has the economic benefit of ownership of the shares, while a nominee shareholder is the person or entity that is on the corporation's register of members as the owner while being in reality that person acts for the benefit or at the direction of the beneficial owner, whether disclosed or not.
Primarily, there are two types of shareholders.
Ordinary shareholders
An individual or legal entity that owns ordinary shares of a company (in the United States commonly referred as common stock) is usually referred to as an ordinary shareholder. This type of shareholding is the most common. Ordinary shareholders have the right to influence decisions concerning the company by participating at general meetings of the company and in the election of directors and can file class action lawsuits, when warranted.[3]
Preference shareholders
Preference shareholders are owners of preference shares (in the United States commonly referred as preferred stock). They are paid a fixed rate of dividend, which is paid in priority to the dividend to be paid to the ordinary shareholders. Preference shareholders usually do not have voting rights in the company.[4]
Rights
Subject to the applicable laws, the rules of the corporation and any shareholders' agreement, shareholders may have the right:
The above-mentioned rights can be generally classified into (1) cash-flow rights and (2) voting rights. While the value of shares is mainly driven by the cash-flow rights that they carry ("cash is king"), voting rights can also be valuable. The value of shareholders' cash-flow rights can be computed by discounting future free cash flows. The value of shareholders' voting rights can be computed by four methods:
The difference between voting shares and non-voting shares (dual-class approach).[6]
The difference between the price paid in a block-trade transaction and the subsequent price paid in a smaller transaction on exchanges (block-trade approach).[7]
The implied voting value obtained from option prices.[8]
^"Shareholder - Definition, Roles, and Types of Shareholders". Corporate Finance Institute. Retrieved 2019-02-19.
^Wright, Tiffany C. "Common Vs. Preferred Stock for Financing a Private Company". azcentral.com. USA Today. Retrieved 23 June 2021.
^ abcdefgVelasco, Julian (2006). "The Fundamental Rights of the Shareholder" (PDF). UC Davis L. Rev. 40: 407–467. Retrieved 16 April 2018.
^Zingales, Luigi (1994). "The value of the voting right: a study of the Milan stock exchange experience". Review of Financial Studies. 7: 125–148. doi:10.1093/rfs/7.1.125.
^Dyck, A.; Zingales, L. (2004). "Private benefits of control: an international comparison". Journal of Finance. 59: 537–600. doi:10.3386/w8711.
^Kind, Axel; Poltera, Marco (2013). "The value of corporate voting rights embedded in option prices". Journal of Corporate Finance. 22: 16–34. doi:10.1016/j.jcorpfin.2013.03.004.
^Christoffersen, Susan; Geczy, Christopher; Musto, David; Reed, Adam (2007). "Vote Trading and Information Aggregation". The Journal of Finance. 62 (6): 2897–2929. doi:10.1111/j.1540-6261.2007.01296.x.
March 15, 2023
shareholder, this, article, multiple, issues, please, help, improve, discuss, these, issues, talk, page, learn, when, remove, these, template, messages, examples, perspective, this, article, represent, worldwide, view, subject, improve, this, article, discuss,. This article has multiple issues Please help improve it or discuss these issues on the talk page Learn how and when to remove these template messages The examples and perspective in this article may not represent a worldwide view of the subject You may improve this article discuss the issue on the talk page or create a new article as appropriate May 2021 Learn how and when to remove this template message This article needs additional citations for verification Please help improve this article by adding citations to reliable sources Unsourced material may be challenged and removed Find sources Shareholder news newspapers books scholar JSTOR April 2020 Learn how and when to remove this template message Learn how and when to remove this template message A shareholder in the United States often referred to as stockholder of a corporation is an individual or legal entity such as another corporation a body politic a trust or partnership that is registered by the corporation as the legal owner of shares of the share capital of a public or private corporation Shareholders may be referred to as members of a corporation A person or legal entity becomes a shareholder in a corporation when their name and other details are entered in the corporation s register of shareholders or members 1 and unless required by law the corporation is not required or permitted to enquire as to the beneficial ownership of the shares A corporation generally cannot own shares of itself 2 The influence of a shareholder on the business is determined by the shareholding percentage owned Shareholders of a corporation are legally separate from the corporation itself They are generally not liable for the corporation s debts and the shareholders liability for company debts is said to be limited to the unpaid share price unless a shareholder has offered guarantees The corporation is not required to record the beneficial ownership of a shareholding only the owner as recorded on the register When more than one person is on the record as owners of a shareholding the first one on the record is taken to control the shareholding and all correspondence and communication by the company will be with that person clarification needed Shareholders may have acquired their shares in the primary market by subscribing to the IPOs and thus provided capital to the corporation However most shareholders acquire shares in the secondary market and provided no capital directly to the corporation Shareholders may be granted special privileges depending on a share class The board of directors of a corporation generally governs a corporation for the benefit of shareholders Shareholders are considered by some to be a subset of stakeholders which may include anyone who has a direct or indirect interest in the business entity For example employees suppliers customers the community etc are typically considered stakeholders because they contribute value or are impacted by the corporation Contents 1 Types 1 1 Ordinary shareholders 1 2 Preference shareholders 2 Rights 3 See also 4 ReferencesTypes EditA beneficial shareholder is the person or legal entity that has the economic benefit of ownership of the shares while a nominee shareholder is the person or entity that is on the corporation s register of members as the owner while being in reality that person acts for the benefit or at the direction of the beneficial owner whether disclosed or not Primarily there are two types of shareholders Ordinary shareholders Edit An individual or legal entity that owns ordinary shares of a company in the United States commonly referred as common stock is usually referred to as an ordinary shareholder This type of shareholding is the most common Ordinary shareholders have the right to influence decisions concerning the company by participating at general meetings of the company and in the election of directors and can file class action lawsuits when warranted 3 Preference shareholders Edit Preference shareholders are owners of preference shares in the United States commonly referred as preferred stock They are paid a fixed rate of dividend which is paid in priority to the dividend to be paid to the ordinary shareholders Preference shareholders usually do not have voting rights in the company 4 Rights EditSubject to the applicable laws the rules of the corporation and any shareholders agreement shareholders may have the right To sell their shares 5 To vote on the directors nominated by the board of directors 5 To nominate directors although this is very difficult in practice because of minority protections and propose shareholder resolutions 5 To vote on mergers and changes to the corporate charter 5 To dividends if they are declared 5 To access certain information for publicly traded companies this information is normally publicly available 5 To sue the company for violation of fiduciary duty 5 To purchase new shares issued by the company To vote on amp file shareholder resolutions To vote on management proposals To what assets remain after a liquidation The above mentioned rights can be generally classified into 1 cash flow rights and 2 voting rights While the value of shares is mainly driven by the cash flow rights that they carry cash is king voting rights can also be valuable The value of shareholders cash flow rights can be computed by discounting future free cash flows The value of shareholders voting rights can be computed by four methods The difference between voting shares and non voting shares dual class approach 6 The difference between the price paid in a block trade transaction and the subsequent price paid in a smaller transaction on exchanges block trade approach 7 The implied voting value obtained from option prices 8 The excess lending fee over voting events 9 See also Edit Wikiquote has quotations related to Shareholder Economy portal Companies portalBeneficial ownership Business valuation Class action Class A share Class B share Corporate governance Employee stock ownership Investor Real party in interest Shareholder value Social ownership Street name securitiesReferences Edit Fontinelle Amy 26 November 2003 Shareholder investopedia com Company shareholders Shareholder Definition Roles and Types of Shareholders Corporate Finance Institute Retrieved 2019 02 19 Wright Tiffany C Common Vs Preferred Stock for Financing a Private Company azcentral com USA Today Retrieved 23 June 2021 a b c d e f g Velasco Julian 2006 The Fundamental Rights of the Shareholder PDF UC Davis L Rev 40 407 467 Retrieved 16 April 2018 Zingales Luigi 1994 The value of the voting right a study of the Milan stock exchange experience Review of Financial Studies 7 125 148 doi 10 1093 rfs 7 1 125 Dyck A Zingales L 2004 Private benefits of control an international comparison Journal of Finance 59 537 600 doi 10 3386 w8711 Kind Axel Poltera Marco 2013 The value of corporate voting rights embedded in option prices Journal of Corporate Finance 22 16 34 doi 10 1016 j jcorpfin 2013 03 004 Christoffersen Susan Geczy Christopher Musto David Reed Adam 2007 Vote Trading and Information Aggregation The Journal of Finance 62 6 2897 2929 doi 10 1111 j 1540 6261 2007 01296 x Retrieved from https en wikipedia org w index php title Shareholder amp oldid 1139710557, wikipedia, wiki, book, books, library,
