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Shareholder

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A shareholder or stockholder is an individual or company (including a corporation) that legally owns one or more shares of stock in a joint stock company. Companies listed on the stock market seek to enhance shareholder value.

Stockholders are granted special privileges depending on the class of stock, including the right to vote (usually one vote per share owned) on matters such as elections to the board of directors, the right to share in distributions of the company's income, the right to purchase new shares issued by the company, and the right to a company's assets during a liquidation of the company. However, stockholder's rights to a company's assets are subordinate to the rights of the company's creditors. This means that stockholders typically receive nothing if a company is liquidated after bankruptcy (if the company had had enough to pay its creditors, it would not have entered bankruptcy), although a stock may have value after a bankruptcy if there is the possibility that the debts of the company will be restructured.

Although directors and officers of a company are bound by fiduciary duties to act in the best interest of the shareholders, the shareholders themselves normally do not have such duties towards each other.

However, in a few unusual cases, some courts have been willing to imply such a duty between shareholders. For example, in California, majority shareholders of closely held corporations have a duty to not destroy the value of the shares held by minority shareholders. See Jones v. H. F. Ahmanson & Co., 1 Cal. 3d 93 (1969) [1].

The largest shareholders (in terms of percentages of companies owned) are often mutual funds.

Smallwikipedialogo.png This page uses content from Wikipedia. The original article was at Shareholder. The list of authors can be seen in the page history. As with Investments, the text of Wikipedia is available under the GNU Free Documentation License.


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