A shareholder is a person who buys or receives securities from an issuing company in exchange for material or intellectual resources. Several types of capital are often attracted for the development of a private enterprise. Contributions can be financial, in the form of personnel and equipment. In addition, risk diversification (minimization) is a logical explanation for why an entrepreneur wants to share industrial responsibility with other partners. For several people to become co-owners of the company, the capital is converted into shares. This usually happens during a period of steady economic growth of the enterprise, when the founders attract new funds for business development.
The scope of shareholders’ rights depends on the number and category of shares owned (the basic rights of the owners of ordinary shares). A shareholder exercises his management rights directly (for example, by selecting the company’s management bodies and approving major transactions) only if alone (Wamba et al., 2018). If there are two or more shareholders, the shareholders exercise their management rights by participating in the general meeting of shareholders. To a large extent, income formation occurs at the expense of the first concept, dividends. It follows from this that the more shares, the more income the shareholder receives.
Dividends can be expressed in a specific amount or as a percentage. Moreover, this indicator is regulated by the statutory documents and the decision of the Board of Directors. The shareholder will receive capital gains only if the shares are sold at a higher price. If this does not happen, then the income is unrealized. Capital gains can even be negative when stocks have been sold at a price lower than they were bought.
In conclusion, the profession of a shareholder is suitable for anyone who knows the specifics of this work. The main thing is to have an identity document. To get a position as a shareholder, you need to purchase shares from their owner or contact a broker (intermediary). If an investor owns shares, then he is a shareholder. In most cases, investors hold most of the money in stocks in investment portfolios since this method of storing money provides the greatest profit.
Reference
Wamba, L. D., Braune, E., & Hikkerova, L. (2018). Does shareholder-oriented corporate governance reduce firm risk? Evidence from listed European companies. Journal of Applied Accounting Research. Web.