A shareholder is a business or an individual that owns shares, also called stocks, in a company. All companies have shareholders.
The number of shareholders in your business will depend on the type of business you’re running, and how many shareholders you want or need to get onboard.
If you run a one-person company you’re still considered a shareholder; In that case you would own 100% of the shares and be a majority stockholder. A majority shareholder owns more than 50% of the company’s shares. Minority shareholders own less than 50% of the company’s shares.
A company that’s set up to own shares in other companies is called a holding company.
What are the benefits of owning shares?
Shareholders, also called stockholders, own the company, and can share in its profits. If the company is doing well, shareholders can get paid a portion of the profit. This is called distributing dividends.
When the company is doing well the stockholders’ shares will also be worth more, which is good if they’re looking to sell them. The inverse is true if the company is doing badly: the shareholders won’t get any dividends, and their shares will sink in value.
Shareholders have the right to participate in elections, for example the elections of new board members, CEOs, or auditors. If the company shuts down, the shareholders have the right to any assets that remain once the company’s debts are covered. If the company goes bankrupt, shareholders will lose everything they’ve invested into the company.
Shareholder register
All companies are required to have a shareholder register. The register should list the current and previous shareholders in the company.
Some companies only have one or two shareholders, and never need to update the list. However, large companies who sell shares will have to update the register frequently, maybe even as often as daily.