Shareholders are individuals who hold ownership in a company through shares and are primarily concerned with financial returns. In contrast, stakeholders represent a broader group, including employees, customers, suppliers, and the community, who are influenced by the company’s operations. While shareholders focus on stock performance, stakeholders prioritise the company’s overall sustainability and long-term value creation.
What is a shareholder?
A shareholder is an individual or entity that provides capital to a company in exchange for partial ownership. This ownership is reflected through common or preferred shares issued by the company and held by the investor.
What is a stakeholder?
Stakeholders are individuals, groups, or organisations that have an interest in or are influenced by a business, project, or organisation. They may be directly engaged in its operations or indirectly impacted by its decisions and results.
Types of shareholders
Depending on the types of shares they own, shareholders can be classified into the two following categories:
1. Common shareholder
Any investor buying common stock of the company is termed a common shareholder. Owning common stock in a company gives investors part ownership as well as voting rights. As part owners, common shareholders are entitled to a share in the company’s profits in the form of capital appreciation and dividend payouts. However, they receive dividend payments only after preferred shareholders are paid.
2. Preferred shareholder
Investors who own preferred stock of a company are termed preferred shareholders. While preferred shareholders receive a fixed dividend payment before common shareholders, they do not possess voting rights on crucial company matters, including the election of board members. Additionally, if a company liquidates, preferred shareholders receive payment from the company’s assets before common shareholders.
