What are the different types of shareholders?
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.
Shareholders are classified into one of two groups: individual investors or institutional investors.
Institutional investors are organisations such as banks, insurance companies or investment companies, while individual investors buy shares with their personal savings.
Institutional investors provide more funding for businesses, but the number of individual investors has increased over the past 15 years.
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.
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.