0936211399 HOTLINE A shareholder is a person, or a company who holds a portion of the ownership of a business by buying shares in the market for shares. Dividends are paid to shareholders when the company increases its stock value or financial profits. Shareholders are not personally accountable for the debts and liabilities of the company, but they do have to take on risk when they invest their money in it.
Shareholders can be classified into two broad groups: those who have common shares and those who hold preferred shares. Companies can also break them down further into class with different rights being associated with each class of shares.
Common shares are usually given to employees as a portion of their remuneration, with the holders enjoying voting rights in matters that affect the company and also receiving dividends derived from the company’s profits. They are second in line to preference shareholders in terms of the right to assets in the event of liquidation.
Preferred shareholders aren’t able to participate in management decisions. They also do not get a fixed dividend rate, and the rate may change depending on the profit situation of the business in any given year. In addition to this the dividends are paid prior to the common shares are paid out in the event of liquidation. Shareholders have other rights such as the right to receive a preferential or special dividend, or no dividend.
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