Post by account_disabled on Mar 4, 2024 1:42:48 GMT -5
In the business world, there are concepts that it is essential to know and knowing what shareholders are is key today to get involved in the current ways of doing business.
In simple terms, shareholders are shareholders who can be a person, company or organization that has shares in a specific company. But to understand better, it will be necessary to know exactly what actions are.
What are shares within a company?
Every business activity needs monetary capital to function, so shares are the parts into which the capital of a company is divided . These " shares of capital" are essential for the functioning of a company.
While it is true that there are companies that do not have shares (generally micro, small and medium-sized companies), it is also true that many constantly need capital to grow.
capital that are the shareholders
There are two types of shares: listed and Chile Mobile Number List unlisted. The former are found in the stock market, which consists of exchanges where individual shares of a company can be bought and sold, while unlisted ones do not have this advantage.
It is important to note that each investor in a company owns a certain number of shares, so they will own the percentage of those titles, and will be known as a shareholder.
plans that are the shareholders
In addition to providing funds for the company, what other activities do shareholders perform ? What benefits do they have? Why are they important?
What are shareholders and what types exist?
As mentioned, the shareholders are shareholders "owners of the percentage of those titles", which are not the company, but the securities. According to Harvard Business Review :
The shareholders do not own the corporation (they own securities that give them a claim on its profits). In law and in practice, they do not have the final say on most major corporate decisions, while boards of directors do.
Harvard Business Review.
In general terms, shareholders can express their opinions to the board of directors, verify the financial statements and even make certain decisions. There are different types of shareholders .
Types of shareholders
Common Shareholders : These are those who own the common shares of a company. They are the common type of shareholders and have the right to vote on matters related to the company, also to file a class action lawsuit against the company for any irregularities that may harm the organization.
Preferred Shareholders : They own a portion of the company's preferred stock and have no voting rights or say in how the company is run. Instead, they are entitled to a fixed amount of annual dividends, which they will receive before their share is paid to common shareholders. These types of shareholders are rare.
stock exchange who are the shareholders
By being clear about this difference, we must be clear that there are similar benefits and risks for both types of shareholders, without forgetting that preferred shareholders do not have a vote in corporate decisions. These items are detailed below.
Shareholder benefits
Among the most "simple" activities of shareholders is that they provide funds, that is, the capital necessary for the company. This activity is not only vital for being a shareholder, but for the companies themselves.
The decision to own shares is made by large corporations and small businesses that need capital. By providing such capital, immediate benefits are obtained, for example:
Venture capitalists and angel investors get board seats and sometimes have veto power over management decisions and appointments.
Justin Fox, former editorial director of Harvard Business Review and Jay W. Lorsch, professor at Harvard Business School.
What are shareholders benefits?
Here are some of the many potential benefits of shareholders .
Vote
One of the main benefits is the right to vote on changes to the company's management. How does this voting work?
Annual meetings : A company's executive board meets annually to report on the company's performance.
Plans : Within these meetings, the operations plans to be developed in the future and the management decisions that the company will have for its growth are announced.
Negotiate and vote : Once the plans are presented and in the event that investors and shareholders do not agree with the future plans of the company or the current management of the company, they have the power to negotiate changes in management or strategy commercial of it.
Dividends and capital gains
In addition to bargaining power, shareholders can receive profits that are paid in the form of dividends. Dividends will be paid periodically (quarterly, semi-annually or annually), however, the company will decide the amount of dividends to be paid and may even retain all profits in order for the company to grow.
In addition to dividends, the shareholder can also enjoy capital gains from share price appreciation. Earnings per share are directly related to a company's return on invested capital and revenue growth. That is, if the company grows, the shareholders ' profits grow.
What are shareholders dividends?
Claim on assets
Shareholders have rights over the assets of a company in which they have shares. This benefit may seem unattractive, but it becomes relevant when a company is liquidated.
In fact, the rights over the assets are relevant and become effective in the event of liquidation. How does it work?
All assets and liabilities of the company are counted.
All creditors are paid.
Shareholders can claim on the remaining assets.
That is, although the shareholders have rights over the assets, these remain at the end of the distribution in a liquidation.
Limited liability
Finally, when a person owns shares in a company, the nature of the ownership is limited. This means that if the company goes bankrupt, the shareholders are not personally responsible for any losses. They may lose their capital, but they have no legal liability or financial penalties.
Shareholder risks
It should be noted that not everything is beneficial for shareholders, there are also risks to consider that include:
Capital loss
The main activity of shareholders is to provide capital. This is, in itself, a risk, since there is a possibility that the company does not work, goes bankrupt and the capital is simply lost.
Furthermore, if they are common shareholders there is no guarantee that the price of a share will rise. For example, you can buy shares for 100 dollars, but it can drop to 80 when the company starts to perform poorly, and therefore there is a loss of 20 dollars of the initial capital.
What are shareholder risks?
No liquidation preference
On this point, it has already been mentioned that the shareholders have the right to the assets, however, when a company is liquidated, the creditors are paid before the shareholders.
Therefore, being a shareholder is considered higher risk than issuing debt (credit, loans and bonds), since creditors are paid before shareholders, and if there are no assets left after paying the debt, shareholders can not get anything.
What are bankruptcy shareholders?
In most cases, a company will only go into liquidation when it has very few assets left to operate. This means that there will be no assets left for the shareholders once the creditors are liquidated, and in addition to losing the capital, the possibility of at least recovering part of it in assets will be lost.
Irrelevant power to vote
The right to vote on important decisions is part of the shareholders' benefits, however, voting power depends on the number of shares owned.
Retail Shareholders : Technically they have the right to vote at executive board meetings, however in practice they usually have very limited influence or power.
Wholesale Shareholders : Usually determines the result of all votes at shareholder meetings.
In simple terms, shareholders are shareholders who can be a person, company or organization that has shares in a specific company. But to understand better, it will be necessary to know exactly what actions are.
What are shares within a company?
Every business activity needs monetary capital to function, so shares are the parts into which the capital of a company is divided . These " shares of capital" are essential for the functioning of a company.
While it is true that there are companies that do not have shares (generally micro, small and medium-sized companies), it is also true that many constantly need capital to grow.
capital that are the shareholders
There are two types of shares: listed and Chile Mobile Number List unlisted. The former are found in the stock market, which consists of exchanges where individual shares of a company can be bought and sold, while unlisted ones do not have this advantage.
It is important to note that each investor in a company owns a certain number of shares, so they will own the percentage of those titles, and will be known as a shareholder.
plans that are the shareholders
In addition to providing funds for the company, what other activities do shareholders perform ? What benefits do they have? Why are they important?
What are shareholders and what types exist?
As mentioned, the shareholders are shareholders "owners of the percentage of those titles", which are not the company, but the securities. According to Harvard Business Review :
The shareholders do not own the corporation (they own securities that give them a claim on its profits). In law and in practice, they do not have the final say on most major corporate decisions, while boards of directors do.
Harvard Business Review.
In general terms, shareholders can express their opinions to the board of directors, verify the financial statements and even make certain decisions. There are different types of shareholders .
Types of shareholders
Common Shareholders : These are those who own the common shares of a company. They are the common type of shareholders and have the right to vote on matters related to the company, also to file a class action lawsuit against the company for any irregularities that may harm the organization.
Preferred Shareholders : They own a portion of the company's preferred stock and have no voting rights or say in how the company is run. Instead, they are entitled to a fixed amount of annual dividends, which they will receive before their share is paid to common shareholders. These types of shareholders are rare.
stock exchange who are the shareholders
By being clear about this difference, we must be clear that there are similar benefits and risks for both types of shareholders, without forgetting that preferred shareholders do not have a vote in corporate decisions. These items are detailed below.
Shareholder benefits
Among the most "simple" activities of shareholders is that they provide funds, that is, the capital necessary for the company. This activity is not only vital for being a shareholder, but for the companies themselves.
The decision to own shares is made by large corporations and small businesses that need capital. By providing such capital, immediate benefits are obtained, for example:
Venture capitalists and angel investors get board seats and sometimes have veto power over management decisions and appointments.
Justin Fox, former editorial director of Harvard Business Review and Jay W. Lorsch, professor at Harvard Business School.
What are shareholders benefits?
Here are some of the many potential benefits of shareholders .
Vote
One of the main benefits is the right to vote on changes to the company's management. How does this voting work?
Annual meetings : A company's executive board meets annually to report on the company's performance.
Plans : Within these meetings, the operations plans to be developed in the future and the management decisions that the company will have for its growth are announced.
Negotiate and vote : Once the plans are presented and in the event that investors and shareholders do not agree with the future plans of the company or the current management of the company, they have the power to negotiate changes in management or strategy commercial of it.
Dividends and capital gains
In addition to bargaining power, shareholders can receive profits that are paid in the form of dividends. Dividends will be paid periodically (quarterly, semi-annually or annually), however, the company will decide the amount of dividends to be paid and may even retain all profits in order for the company to grow.
In addition to dividends, the shareholder can also enjoy capital gains from share price appreciation. Earnings per share are directly related to a company's return on invested capital and revenue growth. That is, if the company grows, the shareholders ' profits grow.
What are shareholders dividends?
Claim on assets
Shareholders have rights over the assets of a company in which they have shares. This benefit may seem unattractive, but it becomes relevant when a company is liquidated.
In fact, the rights over the assets are relevant and become effective in the event of liquidation. How does it work?
All assets and liabilities of the company are counted.
All creditors are paid.
Shareholders can claim on the remaining assets.
That is, although the shareholders have rights over the assets, these remain at the end of the distribution in a liquidation.
Limited liability
Finally, when a person owns shares in a company, the nature of the ownership is limited. This means that if the company goes bankrupt, the shareholders are not personally responsible for any losses. They may lose their capital, but they have no legal liability or financial penalties.
Shareholder risks
It should be noted that not everything is beneficial for shareholders, there are also risks to consider that include:
Capital loss
The main activity of shareholders is to provide capital. This is, in itself, a risk, since there is a possibility that the company does not work, goes bankrupt and the capital is simply lost.
Furthermore, if they are common shareholders there is no guarantee that the price of a share will rise. For example, you can buy shares for 100 dollars, but it can drop to 80 when the company starts to perform poorly, and therefore there is a loss of 20 dollars of the initial capital.
What are shareholder risks?
No liquidation preference
On this point, it has already been mentioned that the shareholders have the right to the assets, however, when a company is liquidated, the creditors are paid before the shareholders.
Therefore, being a shareholder is considered higher risk than issuing debt (credit, loans and bonds), since creditors are paid before shareholders, and if there are no assets left after paying the debt, shareholders can not get anything.
What are bankruptcy shareholders?
In most cases, a company will only go into liquidation when it has very few assets left to operate. This means that there will be no assets left for the shareholders once the creditors are liquidated, and in addition to losing the capital, the possibility of at least recovering part of it in assets will be lost.
Irrelevant power to vote
The right to vote on important decisions is part of the shareholders' benefits, however, voting power depends on the number of shares owned.
Retail Shareholders : Technically they have the right to vote at executive board meetings, however in practice they usually have very limited influence or power.
Wholesale Shareholders : Usually determines the result of all votes at shareholder meetings.