A shareholder is an individual or entity that owns shares or stocks in a company. Shareholders have a financial interest in the company and are entitled to a portion of its profits, usually in the form of dividends. Shareholders also have the right to vote on important decisions affecting the company, such as electing board members or approving mergers and acquisitions.
Shareholders play a vital role in corporate governance by holding management accountable for the company’s performance and decisions. They can voice their opinions at annual general meetings and can propose resolutions to address issues they feel are important. Shareholders can also sell their shares in the open market if they wish to exit their investment in the company.
There are different types of shareholders, including individual investors, institutional investors, and activist investors. Individual investors are everyday people who buy shares of a company through a brokerage account. Institutional investors, such as mutual funds, pension funds, and hedge funds, often hold large amounts of shares and can influence the direction of a company. Activist investors take a more hands-on approach by actively engaging with the company’s management to push for changes that they believe will increase shareholder value. Overall, shareholders play a crucial role in the functioning of a company and can help drive its success.