A shareholder is a business or person that holds part ownership of a business by buying shares on the market for stocks. Dividends are paid to shareholders when the company increases its stock value or financial profits. Shareholders do not have to be personally responsible for the liabilities or debts of the company, however they are taking an element of risk when they invest.

The types of shareholders that are part of a company can be classified into two broad categories namely those who have common shares as well as those you can find out more who own preferred shares. It is also possible for companies to further break them down by class, with different rights attached to the various types of shares.

Common shares are often given to employees as a portion of their salary with the holders gaining voting rights on issues that affect the business and also receiving dividends derived from the company’s profits. They are the second-highest priority shareholders in terms of the right to assets in the event of liquidation.

Preferred shareholders aren’t able to be part of management decisions. They also do not have a fixed dividend rate, and the rate can change according to the profitability of the business during any particular year. They are also paid prior to the common share is sold in a company’s liquidation. Shareholders also enjoy other rights, such as the possibility of receiving a preferential or special dividend, or no dividend.

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