Actual Owner

Posted in Finance, Accounting and Economics Terms, Total Reads: 880

Definition: Actual Owner

An actual owner of an organization or a firm is the one who has the benefits of owning the firm. It can be an individual, a group of individuals or another company. In such a case this individual/ group of individuals/ another company has an absolute decision making power if the firm is privately owner but in case of a publicly listed company the decision of the owner/management can be challenged by the shareholders of the firm.

The one who owns the company also enjoys the benefits of owning the company. Benefits of owning a firm can be both quantitative and qualitative, a few of these benefits can be ‘autonomy’, ‘influence’, ‘oversight’ i.e. ability to control every aspect of the business. An actual owner will be the one who will have a stake of more than 50% in a company. For a privately owned company it will be easy to determine the owner of the company but for a publicly traded company it becomes difficult to identify an actual owner if there is one. This is so because in a publicly traded company there can be many shareholders or there can be shell companies owning various stake in the business. Hence it becomes difficult to identify the actual owner of the firm in such a situation.

For example: In Reliance Industries Limited, the promoter and promoter group (Mukesh Ambani and Co) own 46.63% of the shares of the company, whereas the public owns 53.37% of the shares, hence there is no actual owner from the promoter group and the public shareholders can challenge the decisions of the management during the AGMs.

Rajan Rahega Group companies own 100% stake in Exide Life Insurance and hence are the actual owners of the business.


Hence, this concludes the definition of Actual Owner along with its overview.


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