Are you a proud owner of at least one share in a company? Then you are officially called a shareholder.
The Profile of a Shareholder
A shareholder is an individual or an institution that is part owner of the company where he or she owns at least one share. A shareholder may purchase shares or stocks of a company from the company itself or from the stock market through the aid of a share broker.
A shareholder may continue to purchase shares in the company depending on how well the company performs in the stock market. If the share price of the company goes up or falls down, the shareholder has the option to sell shares or stocks.
Although a shareholder is part owner of the company, he or she is not required to hold any position in the company. Unlike directors and officers of the company who are bound to act in the best interest of the stakeholders, the stakeholders generally don't have such duties.
The money that the shareholder and other investors put into the company's coffers is used by the company to finance its business or plans of expansion without having to borrow money from financial institutions.
Benefits of a Shareholder
A shareholder's return is in the form of dividend plus the capital gain, which the shareholder can get by selling his or her shares. A shareholder may also lose an investment if the company does poorly. A shareholder is also given voting rights in certain company matters such as election to the board of directors.
Aside from voting rights, a shareholder in a company has the right to propose shareholder resolutions, the right to purchase new shares issued by the company, the right to share in the company's income, and the right to the company's assets during liquidation of the company.
A shareholder may also get tax benefits. Tax credits known as franking credits can be used by the shareholder to offset tax payable on other income. Moreover, if the shareholder who owns shares for more than 12 months may qualify for a 50% discount on capital gains taxes.
Some companies provide discounts to their shareholders. Some hotels for instance offer special hotel room rates, merchandise discounts and some freebies exclusive to the shareholders. Some banks provide their shareholders access to discounted establishment fees on selected transactions. While some discounts and freebies cover all shareholders, other discounts may be available to shareholders who hold a specific number of shares.