Everything about Shareholder totally explained
A
shareholder or
stockholder is an
individual or
company (including a
corporation) that legally owns one or more
shares of
stock in a
joint stock company. A company's shareholders collectively own that company. Thus, such companies strive to enhance
shareholder value. Stockholders are granted special privileges depending on the class of stock, including the right to vote (usually one vote per share owned, but sometimes this isn't the case) on matters such as elections to the
board of directors, the right to propose
shareholder resolutions, the right to share in distributions of the company's income, the right to purchase new shares issued by the company, and the right to a company's assets during a
liquidation of the company. However, stockholder's rights to a company's assets are subordinate to the rights of the company's creditors. This means that stockholders typically receive nothing if a company is liquidated after
bankruptcy (if the company had had enough to pay its creditors, it wouldn't have entered bankruptcy), although a stock may have value after a bankruptcy if there's the possibility that the debts of the company will be restructured.
Stockholders or shareholders are considered by some to be a partial
subset of
stakeholders, which may include anyone who has a direct or indirect equity interest in the
business entity or someone with even a non-pecuniary interest in a
non-profit organization. Thus it might be common to call
volunteer contributors to an
association stakeholders, even though they're not shareholders.
Although directors and officers of a company are bound by
fiduciary duties to act in the best interest of the shareholders, the shareholders themselves normally don't have such duties towards each other.
However, in a few unusual cases, some courts have been willing to imply such a duty between shareholders. For example, in
California, majority shareholders of closely held corporations have a duty to not destroy the value of the shares held by minority shareholders.
The largest shareholders (in terms of percentages of companies owned) are often mutual funds, especially passively managed
exchange-traded funds.
Shareholders play an important role in raising finance of any organizations. So these figures pose a great opportunity for all those who are looking for a lucrative option to invest money. All good organization provides all necessary proofs to share holders that they're investing at a right place. Fair and reliable audit figures from income statement and balance sheet enhances chances to make shareholder believe in overall performance.
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