Legal Definitions - shareholder

Shareholder

A shareholder is an individual, group, or entity that legally owns one or more shares of stock in a company, typically a corporation. By owning shares, a shareholder possesses a fractional ownership stake in the company and has certain rights. These rights can include the ability to vote on significant company decisions, receive a portion of the company's profits (known as dividends), and inspect company records, depending on the type and number of shares held.

• Example 1: Investing in a Public Company

  Sarah decides to invest some of her savings by purchasing 100 shares of stock in "Global Innovations Inc.," a large technology company listed on the stock exchange. Once her purchase is complete, Sarah becomes a shareholder of Global Innovations Inc. She now owns a small part of the company and has the right to receive any dividends declared and to vote in shareholder meetings on matters like electing board members.

• Example 2: Startup Founder's Ownership

  When Mark founded his new software company, "CodeCrafters LLC," he initially issued 1,000 shares of stock to himself. At this stage, Mark is the sole shareholder of CodeCrafters LLC. This means he owns 100% of the company and has complete control over its operations and strategic direction, as all ownership is concentrated in his hands.

• Example 3: Institutional Investment

  The "FutureSecure Pension Fund" manages retirement savings for thousands of employees. To grow these savings, the fund invests in a diverse portfolio of companies. When FutureSecure purchases millions of shares in "EcoEnergy Solutions," a renewable energy firm, the pension fund becomes a significant institutional shareholder of EcoEnergy Solutions. It now holds an ownership interest on behalf of its beneficiaries and can influence company policy through its voting power.