A shareholder is someone or a corporation that holds part ownership in a company through the purchase of shares on the stock exchange. Dividends are paid out to shareholders when the company grows its stock value or financial profits. Shareholders are not personally accountable for the debts and liabilities of the business, but they are liable when they invest their money into it.

The kinds of shareholders who are part of an organization can be split into two broad categories – those who own common shares and those who own preferred shares. Companies can also break them down further into class and have different rights attached to each class of shares.

Employees are often given common shares as a part of their compensation. They are entitled to vote in business matters and also receive dividends from the company’s profits. They are second in line to preference shareholders in relation to the right to assets in a liquidation of the business.

The preferred shareholders are not able to participate in management decisions. They also do not get a fixed dividend, and the amount will fluctuate according to the profitability of the company in any given year. They are also paid prior to the common share in the event of a company’s liquidation. It is also possible for shareholders to enjoy various other rights, including view it now the right to a preferential dividend, a special dividend or a no dividend.