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Shareholders are basically the people that buy the shares of stock in a particular company.  The shareholders are considered to be the owners of the company.  Each of the shares of the stock also gives the owner some say so in the way that the business is run.  Shareholders will choose a board of directors that can make the big decisions for the company.

One thing that you should be aware of is the fact that not all corporations allow public shareholders.  Some of them only allow private shareholders.  If the company is privately held, then the stock shares are owned by people that are all acquainted with each other.  They can buy and sell stocks among one another.  Publicly held companies are owned by people that trade shares through the stock exchange.

Corporations that try to please numerous shareholders will find it to be a very difficult task.  Why do they feel the need to do this?  Mainly, the reason that they will issue stock directly to public shareholders is so that they can raise a good deal of money pretty quickly for their business.  Corporations can sell a million shares of their stock at $20 each, which can raise them $20 million pretty quickly.  They can then use this money to buy equipment and pay their employees.

So, what does this mean for the shareholders?  When corporations agree to pay dividends annually, the shareholders will get some of the business profits each year.  There are not many new companies out there that pay dividends.  They usually pay with growth stocks instead, which means that the profits must be reinvested each year.  Shareholders that agree to this type of payment will usually bank on the hopes that the business will continue to grow and become more profitable.  This growth potential can help to determine prices of stock down the road.  Shareholders can sometimes sell their stock in the company for a higher price. uses cookies and may ask for your personal data to enhance your browsing experience. We do not sell any information to any third-parties.