A shareholder, also called a stockholder, owns shares in a company. Shares represent an equity interest and carry rights determined by their class, the company’s documents and applicable law.
A shareholder can be an individual, company, fund, institution or government. Shareholders can own interests in listed or private companies. They own shares; the company itself owns its buildings, equipment and other assets.
Ownership and control are different
In a simple company with 1,000 identical shares outstanding, owning 100 gives a 10% shareholding. That percentage does not necessarily provide control over management or an entitlement to take 10% of the company’s cash.
Voting rights can differ by class. Some shares have no votes or multiple votes. A majority of voting power is therefore different from a majority of the number of shares, and control can depend on agreements and the ownership structure.
Shareholders may vote on directors and specified corporate decisions. Directors and managers conduct the company’s affairs within their respective responsibilities; shareholders do not generally direct every daily transaction.
Common and preferred shares
Common shares, often called ordinary shares in the UK, usually carry voting rights and a residual economic interest. Preferred shares often have priority over common shares for specified dividends or liquidation distributions.
The SEC’s Investor.gov overview explains these broad categories. Actual terms matter: not all common shares vote, preferred dividends can have different structures, and preferred holders may have voting rights in particular circumstances.
Dividends are not guaranteed simply because a company reports profit. Their payment depends on the applicable rights, decisions, financial position and law. The UK government explains that different share classes can carry different rights.
How new shares affect a percentage holding
Suppose the company with 1,000 shares issues another 1,000 identical shares. A shareholder who keeps 100 and buys none of the new issue now holds 100 out of 2,000, or 5%.
The percentage has fallen, but the financial effect depends on the price paid for the new shares and what the company receives and does with the proceeds. Percentage dilution does not automatically halve the value of the original holding.
A new issue can raise money for the company. By contrast, a normal secondary-market purchase from an existing shareholder transfers money to that seller, rather than automatically funding the company.
Losses and limited liability
For fully paid shares in a limited-liability company, holders are generally not personally responsible for company debts merely because they are shareholders. Exceptions and additional obligations can arise, including unpaid share capital, personal guarantees or separate borrowing arrangements.
Shares themselves can become worthless. In liquidation, creditors rank ahead of shareholders; preferred shareholders generally rank ahead of common shareholders according to their terms. Common shareholders may receive nothing.
Holding and selling shares
A registered owner appears on the relevant register. A beneficial owner may hold through a broker or nominee, which keeps records of the underlying entitlement. Investor.gov explains this distinction.
Listed shares are often easier to trade than private shares, but immediate sale is not guaranteed. Market liquidity, trading hours, restrictions and trading halts can matter. A private company’s documents may also restrict transfers.
Shareholders and other stakeholders
A shareholder is one kind of stakeholder. Employees, customers, suppliers, lenders and affected communities may also have an interest in a company’s activities without owning its shares.
A lender has a contractual claim for repayment; a shareholder has an equity claim with different rights and risks. Neither term should be used interchangeably with every person affected by the business.
Last checked and updated on November 11, 2026 by the MBN editorial team.