{{Short description|Individual or organization that owns part of a corporation through shares of its stock}}
{{worldwide|date=May 2021}}
A '''shareholder''' (in the United States often referred to as a '''stockholder''') refers to an [[individual]] or [[legal entity]] (such as another [[corporation]], a [[body politic]], a [[Trust law|trust]] or [[partnership]]) who is registered by a corporation as the legal owner of [[share (finance)|shares]] of the corporations [[share capital]]. Both [[public company|public companies ]] and [[private corporation]] have shareholders. Shareholders may also be referred to as members of a corporation.

A person or legal entity becomes a shareholder in a corporation when they acquire shares and their name and other details are entered in the corporation's register of shareholders or members,<ref>{{cite web |url=http://www.investopedia.com/terms/s/shareholder.asp|title=Shareholder|first=Amy|last=Fontinelle|date=26 November 2003|website=investopedia.com}}</ref> and unless required by law the corporation is not required or permitted to enquire as to the [[beneficial ownership]] of the shares. A corporation generally cannot own its own shares.<ref>{{Cite web|url=https://asic.gov.au/for-business/running-a-company/company-shareholders/|title = Company shareholders}}</ref>

The influence of shareholders on a business is determined by the shareholding percentage owned. Shareholders of corporations are legally separate from the corporation itself. They are generally not liable for the corporation's debts, and the shareholders' liability for company debts is said to be limited to the unpaid share price unless a shareholder has offered guarantees. The corporation is not required to record the beneficial ownership of a shareholding, only the owner as recorded on the register. When more than one person is on the record as owners of a shareholding, the first one on the record is taken to control the shareholding, and all correspondence and communication by the company will be with that person.{{cn|date=December 2025}}

The [[board of directors]] of a corporation generally governs a corporation for the benefit of shareholders.

Shareholders may have acquired their shares in the [[primary market]] by subscribing to the [[initial public offering|IPO]]s and thus providing [[capital (finance)|capital]] to the corporation. However, most shareholders acquire shares in the [[secondary market]] and provided no capital directly to the corporation. Shareholders may be granted special privileges depending on the particular [[share class]] that they hold. 

== Types ==

=== Beneficial shareholders ===
A [[beneficial ownership|beneficial shareholder]] is the person or legal entity that has the economic benefit of ownership of the shares. 

=== Nominee shareholders ===
A [[nominee]] shareholder is the person or entity that is on the corporation's register of members as the owner, while in reality that person acts for the benefit or at the direction of the beneficial owner, whether disclosed or not.

A nominee shareholder relationship in most jurisdictions is governed by [[Trust (law) |trust law]], and therefore is simple and passive: generally, the nominee is not required to do anything except carry out specific (lawful) actions if so directed by the beneficiaries. In the event that a nominee becomes [[Insolvency |insolvent]], the beneficial shareholder should not be affected as the nominee's [[Creditor |creditors]] cannot take possession of the trust assets. 

In some Asian jurisdictions, nominee shareholding is achieved through [[contract law]] and is very complex and risky. For example, in China under the [[Supreme People's Court |Supreme Court]] rules, using a nominee shareholder is ineffective in preventing debt collection actions, as a nominee shareholder cannot escape liability for this on the grounds that they are not the beneficial owner. If a [[capital call]] is made and the beneficial owner omits to provide additional funding, the nominee shareholder is liable to fund the capital call using their own funds. Finally, shares held by a nominee shareholder can be inherited or subject to [[Division of property |marital property division]].<ref>{{Cite web  |title=最高人民法院关于适用《中华人民共和国公司法》若干问题的规定（三）|url=https://flk.npc.gov.cn/detail?id=ff808181799def980179ac07a9ca117c&fileId=&type=&title=最高人民法院关于适用《中华人民共和国公司法》若干问题的规定（三 |language=zh |date=2020-12-29|orig-date=Issued 2020-12-29 |website=最高人民法院 }} Translated in {{Cite web  |title=Guidelines #3 of the Supreme Court on the Company Act of the People's Republic of China |url=https://cbltranslations.com/en-us/china-law/companies/company-act-enforcement-rules-translated/ |access-date=2025-09-26 |website=CBL Translations  |language=en-US }}</ref>

=== Ordinary shareholders ===
An individual or legal entity that owns [[ordinary share]]s of a company (in the United States commonly referred as common stock) is usually referred to as an ordinary shareholder. This type of shareholding is generally the most common. Ordinary shareholders have the right to influence decisions concerning the company by participating at general meetings of the company and in the election of directors and can file class action lawsuits, when warranted.<ref>{{Cite web |url=https://corporatefinanceinstitute.com/resources/knowledge/finance/shareholder/|title=Shareholder – Definition, Roles, and Types of Shareholders|website=Corporate Finance Institute|language=en-US|access-date=2019-02-19}}</ref>

=== Preference shareholders ===
Preference shareholders are owners of [[preference share]]s (in the United States commonly referred as preferred stock). They are paid a fixed rate of dividend, which is paid in [[Subordination (finance)|priority]] to the dividend to be paid to the ordinary shareholders. Preference shareholders usually do not have voting rights in the company.<ref>{{cite web |last1=Wright |first1=Tiffany C. |title=Common Vs. Preferred Stock for Financing a Private Company |url=https://yourbusiness.azcentral.com/common-vs-preferred-stock-financing-private-company-12885.html |website=azcentral.com |access-date=23 June 2021 |url-status=live |archive-url=https://web.archive.org/web/20210624212110/https://yourbusiness.azcentral.com/common-vs-preferred-stock-financing-private-company-12885.html |archive-date= Jun 24, 2021 }}</ref>

=== Institutional shareholders ===
[[Institutional investor|Institutional shareholders]] are organizations that own shares in companies on behalf of themselves or other investors. Common examples include [[Pension fund|pension funds]], [[Mutual fund|mutual funds]], [[Exchange-traded fund|exchange-traded funds]] (ETFs), insurance companies, hedge funds, sovereign wealth funds, and asset management firms. Because these institutions often manage large pools of capital, they may hold significant ownership stakes in publicly traded corporations.

Institutional shareholders can have greater influence over [[corporate governance]] than individual shareholders because of the size of their holdings. They may vote on the election of directors, executive compensation, mergers, shareholder proposals, and other matters submitted for shareholder approval. Large institutional investors may also communicate directly with company management and boards regarding issues such as corporate strategy, financial performance, governance practices, and risk management.

The degree of influence exercised by an institutional shareholder can depend on its investment strategy. Actively managed funds may buy or sell shares based on their assessment of a company's performance and may engage directly with management. Index funds and other passive investment funds, by contrast, generally seek to track a market index and may remain shareholders for long periods because they cannot easily sell individual companies without departing from the index they follow. As a result, voting and engagement can become particularly important tools for passive institutional investors.

Some asset managers exercise voting rights for shares held in funds on behalf of their clients. This can concentrate substantial voting power in a relatively small number of investment management firms even though the economic interests in the shares ultimately belong to many individual investors, pension beneficiaries, and other clients. The role of institutional shareholders has therefore become an important subject in discussions of corporate governance, shareholder activism, proxy voting, and the concentration of ownership and voting power in public companies.<ref>{{Cite web |last=OECD |date=2023-09-11 |title=G20/OECD Principles of Corporate Governance 2023 |url=https://www.oecd.org/en/publications/g20-oecd-principles-of-corporate-governance-2023_ed750b30-en.html |access-date=2026-08-25 |website=OECD |language=en |doi=10.1787/ed750b30-en}}</ref>

== Rights ==
Subject to the [[Corporate law#By region|applicable laws]], the rules of the corporation and any [[shareholders' agreement]], shareholders may have the right:
* To sell their shares.<ref name="velasco">{{cite journal|last1=Velasco|first1=Julian|date=2006|title=The Fundamental Rights of the Shareholder|url=https://lawreview.law.ucdavis.edu/issues/40/2/articles/davisvol40no2_velasco.pdf|journal=U.C. Davis L. Rev.|volume=40|pages=407–467|access-date=16 April 2018 |url-status=live |archive-url=https://web.archive.org/web/20180417191814/https://lawreview.law.ucdavis.edu/issues/40/2/articles/davisvol40no2_velasco.pdf |archive-date= Apr 17, 2018 }}</ref>
* To vote on the directors nominated by the board of directors.<ref name="velasco" />
* To nominate directors (although this is very difficult in practice because of minority protections) and propose [[shareholder resolution]]s.<ref name="velasco" />
* To vote on mergers and changes to the corporate charter.<ref name="velasco" />
* To [[dividend]]s if they are declared.<ref name="velasco" />
* To access certain information; for publicly traded companies, this information is normally publicly available.<ref name="velasco" />
* To sue the company for violation of fiduciary duty.<ref name="velasco" />
* To purchase new shares issued by the company.
* To vote on and file [[shareholder resolution]]s.
* To vote on management [[Compensation and benefits|compensation]] ([[say on pay]]).<ref>{{cite journal |last1=Kind |first1=Axel |last2=Poltera |first2=Marco |last3=Zaia |first3=Johannes |title=The value of say on pay |journal=[[Journal of Banking and Finance]] |date=2024 |volume=169 |article-number=107311 |doi=10.1016/j.jbankfin.2024.107311 |url=https://doi.org/10.1016/j.jbankfin.2024.107311|doi-access=free }}</ref>
* To vote on management proposals.
*To delegate their rights to others. For example, from 1 October 2007, the [[Companies Act 2006]] (in the United Kingdom) has allowed traded companies' registered members to allocate their "information rights" to another person or organisation if they own the shares on the latter's behalf.<ref>PWC, [https://viewpoint.pwc.com/dt/uk/en/uk_gov/companies_act_2006/companies_act_2006__1_UK/part_9_exercise_of_m_UK/information_rights_UK/146_traded_companies_UK.html 146 Traded companies: nomination of persons to enjoy information rights], published on 31 December 2004, accessed on 21 March 2026</ref>
* To receive a share of any [[asset]]s which remain after a [[liquidation]].

These rights can be generally classified into (1) cash-flow rights and (2) voting rights. While the value of shares is mainly driven by the cash-flow rights that they carry ("[[cash is king]]"), voting rights can also be valuable. The value of shareholders' cash-flow rights can be computed by discounting future free cash flows. The value of shareholders' voting rights can be computed by four methods:
* The difference between voting shares and non-voting shares (dual-class approach).<ref>{{cite journal |last1=Zingales |first1=Luigi |title=The value of the voting right: a study of the Milan stock exchange experience |journal=Review of Financial Studies |date=1994 |volume=7 |pages=125–148 |doi=10.1093/rfs/7.1.125}}</ref>
* The difference between the price paid in a block-trade transaction and the subsequent price paid in a smaller transaction on exchanges (block-trade approach).<ref>{{cite journal |last1=Dyck |first1=A. |last2=Zingales |first2=L. |title=Private benefits of control: an international comparison |journal=Journal of Finance |date=2004 |volume=59 |pages=537–600 |url=https://www.nber.org/papers/w8711 |doi=10.3386/w8711|doi-access=free }}</ref>
* The implied voting value obtained from option prices.<ref>{{cite journal |last1=Kind |first1=Axel |last2=Poltera |first2=Marco |title=The value of corporate voting rights embedded in option prices |journal=Journal of Corporate Finance |date=2013 |volume=22 |pages=16–34 |doi=10.1016/j.jcorpfin.2013.03.004}}</ref>
* The excess lending fee over voting events.<ref>{{cite journal |last1=Christoffersen |first1=Susan |last2=Geczy |first2=Christopher |last3=Musto |first3=David |last4=Reed |first4=Adam |title=Vote Trading and Information Aggregation |journal=The Journal of Finance |date=2007 |volume=62 |issue=6 |pages=2897–2929 |doi=10.1111/j.1540-6261.2007.01296.x|url=https://repository.upenn.edu/cgi/viewcontent.cgi?article=1132&context=fnce_papers }}</ref>

==Stakeholders==
Shareholders are considered by some writers to be a [[subset]] of [[stakeholder (corporate)|stakeholders]], who may include anyone who has a direct or indirect interest in the [[business entity]]. For example, [[Employment|employees]], [[suppliers]], [[customer]]s, the [[community]], etc., are typically considered [[Stakeholder (corporate)|stakeholders]] because they contribute value or are impacted by the [[corporation]].

==See also==
{{Wikiquote}}
{{Portal|Economy|Companies}}
* [[Beneficial ownership]]
* [[Business valuation]]
* [[Class action]]
* [[Class A share]]
* [[Class B share]]
* [[Corporate governance]]
* [[Employee stock ownership]]
* [[Investor]]
* [[Real party in interest]]
* [[Shareholder value]]
* [[Social ownership]]
* [[Street name securities]]

==References==
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[[Category:Business terms]]
[[Category:Shareholders| ]]
[[Category:Stock market]]