In the business and investment environment, shareholder is an important term that many people still wonder about its meaning and role. So what are shareholders? What constitutes the power and rights of shareholders in a company? In this article, let's learn with Vietcap about the definition, role and classification of shareholders in the corporate environment. 

According to Clause 3, Article 4 of the Enterprise Law 2020, a shareholder is defined as an individual or organization that owns at least one share of a joint stock company. In other words, a shareholder is a person who contributes capital to a joint stock company and owns a capital contribution corresponding to the number of shares purchased in the company. Each share usually represents a portion of assets and rights in the company.

Shareholders have the right to participate in important decisions of the company through voting at shareholder meetings. These decisions include electing the Board of Directors, approving strategic plans, profit distribution, and other issues related to the company's operations. Shareholders also have the right to receive dividends, that is, money or shares of profits shared with shareholders from the company's revenue.

Depending on the number of shares that shareholders own, they can have a large or small influence on the company's decisions and operations. Shareholders can be individual investors, financial institutions, investment funds, or founders of the company.

The importance of shareholders in the company

While these co-owners earn profits by investing in the company's stock, they also play an important role in operating, financing, managing and controlling Control different aspects of the business. For example,

Influence on the company's operations

Shareholders not only directly influence the company's operations by participating in the appointment of senior personnel, but also influence the company's operations in many other ways. For example, most shareholders generally want to invest in profitable companies, so the company must meet its business objectives and create shareholder value.

Providing sponsorship and capital to the company

Shareholders provide funding and capital to the company through the purchase of shares. This helps companies raise capital and grow their business. Startups and private companies can also raise capital from shareholders through the issuance of shares to selected organizations and individuals.

Corporate administration

Members of the Board of Directors of a public company must be transparent with the list of shareholders about the status and business operations of the company. In fact, senior executives of such companies spend several days each quarter discussing issues related to corporate governance with market analysts, shareholders and organizations such as so. 

Right to control and decide

Shareholders have the right to use their control to determine who will run the company. They have the ability to influence important decisions such as mergers, acquisitions and corporate strategy. Shareholders also have the right to block takeover attempts if they believe the proposed value is inappropriate.

Therefore, with control over most aspects of a company's operations, shareholders play an important role in the company's overall performance and profitability.