A shareholder is a person or corporation that holds part ownership of a company by purchasing shares on the market for shares. The shareholders receive rewards when the company succeeds in gaining stock value and financial returns through dividends. Shareholders do not need to be personally responsible for the debts or liabilities of the company, but they take on an investment risk when they invest.
Shareholders can be classified into two broad categories: those who own common shares and those holding preferred shares. It is also possible for businesses to further divide these shares on a basis of class, with different rights being assigned to different types of shares.
Employees are often awarded common shares as a part of their compensation. They are entitled to vote over business issues and receive dividends from the company’s profits. When it comes to the rights of assets in a company liquidation, they fall behind the preference shareholders.
Preferred shareholders however, are not entitled to participate in the management decisions of the company. The dividend rate is registering your business name not fixed and will change depending on the profitability of the company in any particular year. They also get paid prior to the common share is sold in the event of a company’s liquidation. It is possible for shareholders to enjoy many other rights, such as the right to receive a preferential dividend or a special dividend, or no dividend at all.
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