Owners of a corporation who have purchased shares representing equity stake and are entitled to certain rights and claims on assets/profits.

Shareholders, also known as stockholders, are individuals or institutional investors who, through their legal ownership of one or more shares of stock in a corporation, are not just passive investors, but become empowered as one of the company’s owners. This ownership comes with certain rights and claims, proportionate to their percentage of ownership stake, that allow them to actively participate in the company’s decisions and direction.

As partial owners, shareholders assume some of the risks of the business. However, they also have the exciting potential to not just share, but significantly contribute to the company’s profits and growth. This can be through the appreciation of their shares or dividend payments, which can make their investment in the company a rewarding and highly profitable venture.

Crucially, shareholder rights include voting on all important corporate decisions, such as electing the board of directors, approving mergers or sales, and amending corporate bylaws or charters. Shareholders can also attend annual shareholder meetings, inspect corporate records, and submit proposals on how the company is governed. These rights are not just privileges, but a testament to the significant role shareholders play in the company’s operations.

Shareholders also maintain residual claims on the corporation’s assets and earnings after creditors and other claimants are paid. In bankruptcy or liquidation, shareholders are the last to recover a prorated portion of what remains based on their equity stake.

While common shareholders have voting rights, preferred shareholders have priority in receiving a specific dividend amount before common shareholders. Common shareholders typically have more voting power, while preferred shareholders have a higher claim on the company’s assets and earnings in the event of liquidation. Overall, being a shareholder grants ownership rights, potential investment returns, and some risk exposure based on the company’s performance.

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