Who really holds influence within a company?
It’s not just the CEO or executive board. Shareholders also play a central role.
They invest in the business, monitor decisions, and quite literally have a voice in how the company is run.
But what does it actually mean to be a shareholder? And what rights and responsibilities come with that role?
In this blog, Corporify explains the essentials of company shareholding and what it means in practice.
What is a company shareholder?
A shareholder – also called a stockholder in some regions – is any person, mutual fund, or organisation that owns at least one share, often in the form of common stock.
This equity stake entitles shareholders to certain rights, financial returns, and a voice in key company decisions, depending on the type and number of shares they hold. They are technically part owners of the company, provided that the individual or entity holds shares. This business involvement allows shareholders to influence both financial outcomes and strategic direction.
In legal and practical terms, both “shareholder” and “stockholder” refer to an individual or entity that owns shares in a company and holds specific shareholder rights and responsibilities. These rights are typically outlined in the company’s bylaws or shareholder agreement.
In essence, shareholders are company owners. They invest capital in exchange for part ownership, and that equity links them directly to the company’s profits, growth, and decisions.
In legal terms, each company shareholder becomes a fractional owner of the business and can influence key decisions. This relationship between shareholding and governance lies at the heart of how modern business operates.
Whether the entity is a private firm or a public corporation, the shareholder’s role remains anchored in equity participation and governance.
Are shareholders the same as stockholders?
Yes.
The terms “shareholder” and “stockholder” are interchangeable. Both refer to a person or entity that owns company shares.
However, different jurisdictions may prefer one term over the other. For instance, “stockholder” is more common in the United States, while “shareholder” is widely used in Europe.
Types of shareholders: from majority to minority, from common to preferred
Shareholders come in many forms. Understanding the different types of shareholders is essential for managing capital interests, voting rights, and dividend payments. Every shareholder fits into one or more of these categories:
#1 Common shareholders
Common shareholders - also known as ordinary shareholders - are the most typical type of individual involved in corporate participation. They hold company equity that grants them voting rights and dividend eligibility, though their claims come after those of preferred shareholders in the event of liquidation.
They usually:
- Own common stock that grants one vote per share
- Receive dividends after preferred shareholders
- Have a residual claim on the company’s assets if it is liquidated
As equity holders, they assume the risks and rewards that come with such a position, alongside responsibilities toward broader stakeholders.
#3 Majority shareholders
A majority shareholder holds more than 50% of a company’s outstanding shares and, with that, a commanding voice in how the business is run. Often a founder, family, or institutional investor, this type of shareholder has the power to steer strategic decisions and shape corporate leadership with minimal opposition. They are often expected to consider the interests of stakeholders beyond just financial returns.
These shareholders often:
-Control board members and company directors
- Influence the company’s strategic direction
- Approve shareholder resolutions with ease
#4 Minority shareholders
Minority shareholders own a smaller portion of the company’s outstanding shares. They do not control the board but still have the right to vote, inspect the company’s books, and receive dividends. In many organisations, these individuals play a passive role but still benefit from financial returns and the overall success of the business. Even without control, they can support stakeholder-driven resolutions.
Shareholder example: ownership in action
- Emma owns 2,000 shares of a public tech company. As a retail investor and common shareholder, she receives dividend payments and participates in shareholder meetings.
- The Walton family owns over 50% of Walmart. This controlling stake allows them to control key board decisions and corporate governance for the large public corporation. Their long-term strategy relies on keeping majority control within the family.
- Blackstone, a private equity firm, acquires a controlling stake in a logistics business. As majority shareholders, they appoint company directors and restructure operations to improve performance. Their equity stake allows them to realign the business model, implement strategic change, and influence leadership throughout the investment period.
- Lisa owns 100 shares of McDonald’s. Though a minority shareholder, she receives quarterly dividends and has voting rights on directors and key resolutions. As a shareholder, Lisa also has a say in appointing board members who represent her interests and those of fellow stakeholders.
- Rajan holds preferred shares in a Belgian fintech firm. He receives a fixed dividend each year but holds non-voting shares, which means he benefits financially but lacks direct influence on corporate decisions.
- An employee at Microsoft participates in an ESOP (Employee Stock Ownership Plan). Over time, they accumulate stock options that vest annually. As a part owner, the employee receives dividends and contributes to company performance. Their role as both employee and shareholder creates a strong connection to the company’s success and long-term goals. It also strengthens alignment between internal stakeholders and corporate decision-makers.
- An institutional stockholder like Vanguard or BlackRock owns significant portions in hundreds of companies. Their voting power can influence director elections, ESG strategy, and executive compensation. These votes often reflect broader stakeholder expectations on sustainability and governance.
What does it mean to be a shareholder?
Being a shareholder means more than just owning stock.
Shareholders:
- Help fund the company through financial investment
- Earn dividends and benefit from increases in the company’s stock value over time.
- Influence how the company is run via the right to vote
This right to participate in key decisions allows shareholders to help shape the composition of board members, who in turn steer the company’s strategic direction and represent the interests of both shareholders and other members of the corporate community. Through their support and engagement, shareholders can also support initiatives that benefit stakeholders.
They are legally considered part owners but are not liable for the company’s debts. Their legal status and financial risk are limited to the money used to purchase shares. A shareholder may also choose to sell their shares on the stock market at any time, provided they meet relevant regulatory requirements. In private organizations, selling shares might require board approval.
For public companies, even owning one share gives the shareholder access to financial statements, annual meetings, and dividend payments. For private companies, rights may be more restricted and dictated by a shareholder agreement or the bylaws of the organisation.
Shareholder rights: what you’re entitled to
Shareholders hold significant rights that enable them to oversee and influence how the company is run:
1. Voting rights: Common shareholders can influence the board of directors, executive pay, mergers, and company policies, a key governance power for any stockholder.
2. Dividends: Shareholders receive dividends as part of the company’s profits. Preferred shareholders are paid first, typically at a fixed rate.
3.Inspection rights: They can inspect the company’s books and financial statements to ensure transparency and proper oversight.
4. Legal recourse: Shareholders can sue directors or officers for fiduciary duty violations. They may also initiate derivative actions on behalf of the corporation. These legal mechanisms can help safeguard long-term stakeholder interests.
5. Limited liability: They are not personally responsible for the company’s debts. This principle protects individual investors from financial ruin.
6. Participation in annual meetings: Shareholders attend annual meetings as well as special meetings to stay informed and vote on significant resolutions.
7. Sell their shares: Shareholders are free to sell their shares and exit their investment. Some may divest when they feel the company is not aligned with stakeholder values. Timing, however, impacts taxable income and capital gains.
8. Benefit from stock appreciation: Shareholders can profit from rising stock prices, especially in companies that consistently act in line with stakeholder expectations.
The extent of these rights can vary depending on the jurisdiction, share class, and the internal governance structure of the organization.
What is a shareholder resolution?
A shareholder resolution is a formal proposal submitted to vote on a specific company matter. These typically occur during general meetings and can address:
- ESG practices and sustainability initiatives
- Executive compensation adjustments
- Board appointments and term limits
To submit a resolution, a shareholder usually must own at least one share, though some corporations require a minimum threshold. The board of directors may recommend for or against the proposal, and the final decision lies with the voting members.
Shareholder resolutions have become a powerful tool in promoting corporate social responsibility. Some resolutions specifically target changes in leadership, such as nominating independent board members to improve oversight. While any qualifying shareholder can submit a resolution, majority shareholders often have the influence to push such proposals through with limited opposition
How do shareholders get paid?
The way a business generates and distributes profit directly affects shareholder income. Shareholders receive dividends and capital gains:
- Dividends: Corporations distribute a portion of the company’s profits as regular or special dividend payments, typically based on the number of company’s stock shares held. These are typically paid quarterly, though REITs often pay monthly.
- Selling shares: Shareholders can sell their shares in the stock market for a profit. Timing and strategy determine the resulting taxable income. This offers people the opportunity to grow their money through long-term investment and market appreciation.
Some holders of preferred stock receive monthly dividend distributions or fixed annual payments, offering stable income.
Dividends are often declared at general meetings and documented in corporate reports. Not every company pays dividends regularly; some choose to reinvest profits into growth and innovation.
Becoming a shareholder: how does it work in a company context?
You can become a shareholder by:
- Buying shares in the stock market through brokerage accounts – this allows any person or entity to become part of a stock-based ownership structure. Depending on the share class, this may come with voting or non-voting rights. In doing so, the investor commits capital in exchange for a shareholding in the company.
- Acquiring shares through an ESOP or equity compensation plan.
- Receiving stock as part of a business partnership or startup equity.
Some shareholders, or stockholders, receive non-voting shares, such as preferred stock, while others own voting shares in the form of common stock, depending on the company’s share class structure. In both cases, they contribute money in return for ownership rights, including the right to influence key matters such as the appointment or removal of board members.
If a person owns shares in multiple companies, they may have different levels of access or influence depending on the organisation. In private companies, for example, major decisions - such as issuing new shares - often require approval from the board of directors.
Every share represents a proportional interest in the business. And for many shareholders, this stake is both a financial investment and a strategic opportunity, one that can also influence stakeholder outcomes across the value chain. Every company has its own structure for issuing, managing, and classifying shares, and understanding that structure is key to knowing what rights your shares carry and how share allocation shapes the business itself.
Corporate structures and share classes: real-world examples
- Alphabet (Google) has three classes of stock: Class A (one vote), Class B (ten votes, held by founders), and Class C (no right to vote), each reflecting a distinct stockholder influence on governance. It’s an example of how a company can design its share classes to reflect both governance priorities and market accessibility.
- Meta (Facebook)gives Mark Zuckerberg majority voting control via Class B shares despite owning a small part of the equity. This keeps founder control intact and centralizes decision-making.
- Berkshire Hathaway offers Class A shares (high price, full vote) and Class B shares (fractional equity interest and voting power), allowing smaller stockholders to participate in equity. Each share class reflects the company’s philosophy on capital structure, accessibility, and long-term commitment.
- Publix is 100% employee-owned via an ESOP, where workers own shares and receive dividend income as part of their retirement benefits.
- Procter & Gamble operates a traditional structure, where each share carries equal influence in corporate decisions, making shareholder influence directly proportional to shares held.
If you're looking for additional resources on how companies classify and manage share classes, organizations like the SEC and OECD provide practical guidance. Many corporations also publish governance handbooks for shareholders.
Shareholders vs. stakeholders
Stakeholders include anyone impacted by the company: employees, customers, suppliers, and communities. A company’s success often hinges on its ability to balance the interests of all stakeholders. How a company treats its employees, communities, and environment can be just as critical as financial performance.
- Shareholders care about return on capital and stock appreciation.
- Stakeholders often prioritise corporate social responsibility, employee well-being, and long-term sustainability.
Stakeholder theory argues for balancing all interests, not just maximizing shareholder profit. While shareholders own stock and seek financial returns, stakeholders seek stability, ethical conduct, and a positive organisational impact.
Shareholders influence corporate governance
Shareholders are vital to corporate governance.
They elect board members, evaluate board performance, and help determine business strategy.
Strong governance builds trust, improves transparency, and supports responsible growth. A well-governed company is better equipped to balance short-term results with long-term sustainability. It also strengthens trust among stakeholders across the ecosystem.
- Large institutions, like pension funds and mutual funds, often vote based on proxy advisory recommendations (e.g., ISS or Glass Lewis), shaping governance outcomes.
- Retail investors participate via online platforms, contributing to shareholder democracy and reinforcing organizational integrity.
Company directors are accountable to shareholders and must act in their best interest. Shareholder activism, especially from large stockholders, continues to shape boardrooms and corporate outcomes.
Communicating with shareholders: a must-have process
Company leadership must keep shareholders informed. Timely and transparent communication:
- Builds investor trust
- Clarifies dividend schedules
- Details resolutions for upcoming meetings
Corporify enables streamlined communication. From issuing digital updates to tracking voting results, Corporify centralises all shareholder activity in one secure platform.
Features include:
- Digital distribution of company policies
- Version-controlled storage of shareholder agreements
- Real-time voting dashboards
In conclusion: shareholders matter more than ever
Whether they own common stock, preferred stock, or non-voting shares, shareholders remain fundamental to a company’s financial structure and decision-making. They invest capital, elect directors, receive dividend payments, and influence corporate strategy. Their rights - from attending shareholder meetings to inspecting financial statements - are essential to corporate transparency and long-term success.
Shareholders, or stockholders, are more than investors; they are stewards of organisational success. Whether you own one share or a million, your voice and your influence contribute to shaping the company’s future, and increasingly, to safeguarding stakeholder interests in that process.
Every company depends on its shareholders to fund, guide, and support its growth journey. An efficiently governed business depends on clear shareholder structures, transparent records, and reliable communication. In both startups and established corporations, structured shareholder engagement is key to sustainable decision-making. That engagement increasingly includes stakeholder representation and impact.
