A shareholder is a person, or a company that http://companylisting.info/2021/04/06/understanding-types-of-companies/ holds part ownership of a business by buying shares in the market for stocks. Shareholders receive a reward when the business succeeds in increasing its stock valuation and financial earnings through dividends. Shareholders do not need to be personally responsible for the debts or liabilities of the company, however they take on an element of risk when they invest.

Shareholders can be divided into two broad groups: those who have common shares and those who hold preferred shares. Companies can also break them down further into class with different rights being attached to each class of shares.

Common shares are often given to employees as a percentage of their pay and the holders enjoy voting rights on issues that affect the business, and also receiving dividends derived from the company’s profits. When it comes to the rights of assets in a business liquidation, they rank behind preference shareholders.

Preferred shareholders, on the other hand are not able to take part in the management decisions of the company. They also do not receive a fixed dividend rate, and the rate may change according to the profitability of the company in a particular year. Additionally the dividends are paid prior to the common shares in a liquidation of the company. It is possible for shareholders to be granted several additional rights, including the right to receive a preference dividend, a special dividend or no dividend at all.