Shareholders are people or companies that invest money in a company by purchasing shares. They can earn a profit, or loss on their investment depending on the performance of the company as well as its ability to pay dividends. They also benefit from the potential for capital appreciation, which is when the value of shares increase over time. The rights and privileges of shareholders could differ based on state law and the terms of a corporation’s charter or bylaws.

There are two types of shareholders in a company such as common stockholders and preferred shareholders. The majority of shareholders are common stockholders and they have voting rights at shareholder meetings. They are able to participate in the decision-making process as well as scrutinize reports. Preferred shareholders are entitled to preferential dividends, and they are more valuable than ordinary shares during liquidation.

The term “shareholder” can be used to describe a person who holds debentures or bonds issued by the company, which are debt instruments that grant investors the right to receive a certain rate of return on their investment. They are typically not involved in the day-to-day operations of the company, however their interests can be included in the governance body.

Strategic shareholders are investors who purchase shares in a business to reach some specific strategic objective like acquiring new markets or technologies. This type of shareholder plays an essential role in a family-owned business, as they understand the scope of the venture and its potential, and are willing and capable of taking risks for the benefits of their investment.