In the investing world, the idea of a shareholder is thrown around a lot without much regard to what it really means. Whenever you talk about investing or securities, it is always a good idea to know what you are talking about. That is why it is important for all investors to know what it means to be a shareholder and what the term really means.
What Is A Shareholder?
Investopedia.com defines a shareholder as any entity that has purchased one or more stocks from a company. An entity can be an individual, or it could be an organization. That stock is called a share and it represents a portion of ownership in the company.
Responsibility Of A Shareholder
Certain types of stocks come with the ability to vote on actions the company takes that affect revenue. Shareholders can vote on such actions as approving new members to the board of directors, plans that deal with issuing future stock options, and the approval of any plans that give share ownership to company employees.
Shareholders help to dictate company policy and approve major financial decisions that will affect the future of the company. When an investor becomes a shareholder in a company, that investor can become very active in the dealings of that company and become one of the reasons for that company's future success.
Keep yourself updated on the best ways to look after your personal finances by signing up for Mint.com.