What’s a shareholder?

A shareholder, also sometimes known as a stockholder, owns a part (a share) of a business.

They own the “equity” in a business.

A business may have many shareholders, or it may have only one. But, ALL businesses have at least one shareholder, one person (or another company) that owns the equity.

Three really important things to know.

  • First, shareholders usually have more financial risk than do other participants (e.g. employees, lenders, vendors) in a company.
  • Second, shareholders usually have more opportunity to make lots of money because a business succeeds than do other participants in a company. ¬†They have more “upside”.
  • Third, all shareholders aren’t equal. There’s a pecking order. The shareholders who own preferred stock have different rights and opportunities than do the shareholders who have common stock.