Understanding the Different Types of Shareholders (2024)

There are several different types of shareholders that can hold an ownership stake in a company. Here are some of the most common types of shareholders:

• Common shareholders: These shareholders own common stock in a company and have voting rights in shareholder meetings. They have a claim on the company's profits, known as dividends, and have the potential to earn capital gains if the value of the stock increases.
• Preferred shareholders: Preferred shareholders have a higher claim on the company's assets and dividends than common shareholders. They do not typically have voting rights, but they may have a higher priority in the event that the company goes bankrupt, and assets are distributed.
• Insiders: Insiders are individuals who are directly involved with the company, such as executives or board members. They may hold shares in the company because of their involvement.
• Institutional investors: Institutional investors are large organizations, such as pension funds or mutual funds, that invest in a variety of assets, including company stock.
• Retail investors: Retail investors are individual investors who buy and sell stock through brokers or online trading platforms.
• Passive investors: Passive investors are individuals or organizations that hold a long-term stake in a company, rather than actively trading the stock. They may be more interested in the company's long-term growth prospects than in short-term price fluctuations.