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What are the different types of shareholders?

Updated April 17, 2017

Shareholders are investors who own a percentage, or shares, of a company. Shareholders are entitled to a portion of company profits, which they receive through dividends. The different types of shareholders are dependent on the type of investor, type of stock and type of company.

Types

Shareholders are classified into one of two groups: individual investors or institutional investors.

Facts

Institutional investors are organisations such as banks, insurance companies or investment companies, while individual investors buy shares with their personal savings.

Significance

Institutional investors provide more funding for businesses, but the number of individual investors has increased over the past 15 years.

Features

Shareholders can also be grouped by the type of stock they hold. Preferred-stock holders have more rights to company profits and dividends than common-stock holders.

Considerations

The type of shareholder can also depend on the type and structure of the company. Large, established companies have a majority of shareholders that invest money simply to receive dividends and increase the value of their shares, while small, start-up companies have more shareholders who founded the business and actually run the business on a daily basis.

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About the Author

Shane Thornton has published business-related on eHow.com. In addition to business, his other areas of interest include sports, traveling and entertainment. He earned a Bachelor of Science in Business management from Arizona State University’s W.P. Carey School of Business.