Common Shareholder

Posted in Finance, Accounting and Economics Terms, Total Reads: 1080

Definition: Common Shareholder

An individual or an institution or a company that hold common shares of a company, entitling them to part ownership of the company.

Let us understand stock first, stock is the capital raised by a corporation or company by the issue of ‘shares’. So we put in the simple terms, if you own a stock of a company you are part owner of the company.

So basically if you own a stock of a company it means that you are one of the many shareholders/owners of the company and you can claim (in the ratio of your stock) everything the company owns. The meaning of the terms stock or equity or shares in this respect mean the same thing. The stocks issued by company are of two types: Common and Preferred. Common stocks are the one, which can be bought from a stock exchange and they do not have any preference. Common shareholders are entitled to vote during a annual general meeting. But common shareholders have the disadvantage that they are on the bottom of the priority structure for assets or earning of a company. IF the company ever liquidates the common shareholders have rights to company only after preferred shareholders, bond holders and other debt holders. Common share can sometimes come in two classes – A and B. The difference between the two would be the difference in voting rights and dividend rights.

The below image shows the common stock price of a popular company. So this shows you can get one share for Rs 2455. So by buying one share of the company at Rs. 2455, you will become part owner of the company for the weightage of I unit of your share in the total share capital.

Hence, this concludes the definition of Common Shareholder along with its overview.

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