A shareholder, also known as a stockholder, is an individual, company, or institution that owns at least one share of a company's stock. Shareholders are the owners of a corporation and, as such, have certain rights and responsibilities. For example, shareholders have the right to vote on major corporate decisions, such as electing the board of directors and approving mergers or acquisitions. They may also receive dividends, which are distributions of the company's profits to its shareholders. Shareholders can be classified as common shareholders or preferred shareholders based on the type of stock they own.
For instance, a person who buys shares of Apple Inc. becomes a shareholder of Apple and gains partial ownership of the company. If Apple performs well and profits, the shareholder may receive dividends or see the value of the shares increase. However, as an owner, a shareholder also bears the risk of the company's potential losses.
The significance of shareholders extends beyond ownership as they can influence how a company operates and makes decisions. This influence is typically exercised through voting during shareholder meetings.