What is a shareholder?

Definition of shareholder
shareholder is the holder of one or more shares of a company. These shares give him the right to attend general meetings of the company, to participate in the strategic decisions of the company (if a voting right is associated with the share ) and to receive the payment of dividends (if the company in pour). The shareholder can be a natural person (an individual) or a legal person (a company).

How to become a shareholder

To become a shareholder, you have to buy shares in the company for cash. If the company is listed on the stock exchange, the transaction is made through an organized market . In this case, it is necessary to find a counterparty (a seller) who no longer wishes to be a shareholder of the company. You just need to place a stock market order through a broker and place a buy order to become a shareholder.

If the share is not listed, becoming a shareholder is more complicated. The shareholders must agree to open the capital of the company to other shareholders or that one of the shareholders sell his shares.

The rights of a majority and minority shareholder

A majority shareholder is a person holding at least 50% of the voting rights of a company. He has the decision-making power within the company even if all the remaining shareholders do not agree with him. Please note, a shareholder can own more than 50% of the shares but have a lower voting right (some shares do not give access to voting rights). It is then not a majority shareholder. Note that it is rare to see a majority shareholder for a company listed on the stock exchange.

All other shareholders are minority shareholders. This is the case for example of an individual holding only a few shares but also of an investment fund holding several% in the capital of the company. Alone, their power to influence company decisions is limited in the face of a minority shareholder who owns several tens of% of the capital.

However, minority shareholders can associate with each other. If they manage to combine 10% of the capital and voting rights, they can request the appointment of an expert to analyze management decisions. If the minority shareholders manage to come together to form a block representing at least 1/3 of the capital and the voting rights, then they can form a blocking minority, then it can block the decisions taken during an extraordinary general meeting ( changes to the articles of association, the share capital, etc.) but not the current decisions taken during an ordinary general meeting.

The different types of shareholders

There are 3 main types of shareholders:

– individuals: These are shareholders whose sole objective is to increase the share price. They can be individuals but also employees of the company who receive shares as additional remuneration. Their investment horizon can range from short term (trading) to very long term (investment).

– Institutionals: These can be hedge funds, pension funds or even companies. The objective of these shareholders is often speculative but they also wish to influence, if possible, the strategic decisions of the company by buying a large number of shares.

– The State: It is a very particular shareholder. Its objective is twofold. He wishes both to derive financial benefits from his investments but also to defend public interests in strategic sectors for the country.


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