Shareholders are those who own shares in a company, and receive benefits from the company’s performance. Shareholders can invest in various ways as a shareholder, whether it’s an open or private business.
A shareholder can sell their shares to another investor to earn a return. If a company’s profits increase then the value of the shares will increase as well and is referred to as capital gains. Shareholders are legal entities, individuals or members of a corporation.
There are various kinds of shareholders and their rights and privileges depend on the type. Certain shares have voting rights however, others do not. Certain shares are also paid dividends in a different way than others. These rights are stipulated in the bylaws or charter of the company and state laws.
The most common types of shareholders are common, preferred, and institutional. Common shareholders are the individuals who own the company’s common stock and have the right to vote on corporate issues and business decisions. Dividend payouts are based on the company’s profits. Preferred shareholders have priority over ordinary shareholders in dividend distribution. They also have a greater claim on assets in the event that a company is liquidated. Institutional shareholders are large corporations such as pension funds, mutual funds and hedge funds which own substantial shares in the company.
http://companylisting.info/2021/04/06/understanding-types-of-companies/