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What Are Shareholders?

A shareholder is a person or entity that owns shares of a business, which gives them a right to a piece of the corporation. Shareholders typically invest their funds in a business through an exchange or mutual fund. They can also give suggestions on how the business is run, or hold an office on the board. The importance of shareholders varies from one business to the next, with some shareholders having greater influence than others, dependent on the nature of the business and how it is run. Certain companies offer their shareholders dividends.

Democratize Finance For All

Shareholders are the lifeblood of any business since they own a part of it. This ownership stake is reflected by the financial performance of the company. If a company is performing well, its shares’ value increases and shareholders can sell their shares to earn profits. If a company is performing poorly and their shares are undervalued, the value of their shares will decline and shareholders could lose their investment. Therefore, it is vital for investors to diversify their portfolios in order to be protected from the possibility of huge losses from a single investment. Investors who purchase shares in businesses can have number of rights and obligations. These include voting on the appointment and removal of directors as well as attending shareholder meetings. In some countries shareholders are able to seek out a company’s shareholder list to find out who owns the business. This is usually useful for advocacy because it can reveal the power of a group of individuals to influence company decisions.

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