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Simple English definitions for legal terms
controlling shareholder
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A quick definition of controlling shareholder:
A controlling shareholder is someone who owns a lot of shares in a company and has the power to make important decisions. They can do this because they either own more than half of the company's shares or they own a significant number of shares that are spread out among many other people. This means they can influence what the company does and how it operates. It's important to note that not all shareholders have this kind of power, and some may only own a small portion of the company.A more thorough explanation:
A controlling shareholder is a person or entity that has the power to influence the decisions and activities of a company because they own a significant portion of its shares. This can be either a majority shareholder who owns more than half of the company's stock or a minority shareholder who owns a smaller percentage but has a significant number of shares.
- Majority shareholder: John owns 60% of the shares in XYZ Corporation, which gives him the power to control the company's management and make important decisions.
- Minority shareholder: Sarah owns 10% of the shares in ABC Corporation, but because the remaining shares are widely distributed among many others, she still has a significant influence on the company's activities.
These examples illustrate how a controlling shareholder can have a significant impact on a company's operations and decision-making processes. They have the power to sway votes and make decisions that can affect the company's future direction and success.