An individual or entity that owns shares in a corporation, giving them a financial interest in the company and certain rights, such as voting or receiving dividends.
What is a Shareholder?
A Shareholder—also called a stockholder—is a person, company, or legal entity that owns one or more shares of stock in a corporation. By owning shares, a shareholder has a proportional ownership interest in the business and may be entitled to specific rights and benefits, depending on the type of shares held.
Shareholders are the owners of a corporation. Their rights are typically outlined in the corporate bylaws or shareholder agreements, and often include:
- Voting rights on key matters (e.g., electing directors, approving mergers)
- The right to receive dividends, if declared by the board
- A claim to assets if the company is liquidated (after debts are paid)
- The right to inspect certain corporate records or financials
There are generally two types of shareholders:
- Common shareholders, who hold standard voting rights and potential dividends
- Preferred shareholders, who may have priority over common shareholders in receiving dividends and liquidation proceeds, but may have limited or no voting rights
In the case of private corporations, shareholders are often founders, investors, employees, or strategic partners. In public companies, shares are traded on stock exchanges and can be owned by the general public.
For non-U.S. founders of U.S. corporations—especially Delaware C Corporations—being listed as a shareholder means you legally hold equity in the company. Foreign shareholders may face U.S. tax obligations, such as withholding taxes on dividends, and may need to submit forms like W-8BEN to claim tax treaty benefits.
The number of shares owned determines the percentage of ownership and influence a shareholder has. For example, owning 25,000 out of 100,000 outstanding shares means owning 25% of the company, subject to dilution if new shares are issued.
In summary, shareholders are the financial owners of a corporation. Their role can range from passive investor to active participant in corporate governance, and their rights and responsibilities are defined by the type of shares they hold and the legal structure of the business.
