A shareholder is an individual or institution that holds shares of an organization and has a claim to a portion of its assets. Shareholders are able to make decisions within a company that could affect its operations in the day-to-day and financial health. This includes appointing and eliminating directors, deciding the amount directors are paid and setting dividend structures for the company. Directors are not liable for the debts of the company.
In addition to a share of the profits of the business shareholders are also entitled to regular dividend payments and the right to inspect the books and records of the company. Certain companies offer incentives to shareholders, for example, free products or discounts on services. These perks are intended to encourage shareholder participation and may differ from one company to the next.
Based on the kind of stock, a shareholder may be granted additional rights, as specified in the corporation’s charter and regulations. For example common stock comes with voting rights, whereas certain companies issue a different kind of stock known as preferred stock, which does not. These stocks may include conversion features that permit shareholders to convert their shares at https://boardportalpro.org/what-are-shareholders/ certain future dates into common stock.
In general, shareholders earn money by enjoying capital gains when price of shares rises, or through dividends if the company pay them. However, they are at risk if the price of stocks drop or if the company fails to pay its debts and needs to liquidate assets.
