Investopedia defines the term shareholder as any individual, company or institution that holds at least one share of a company’s equity. Unlike the owners (sole proprietor/partners) shareholders are not responsible for company debts or any other financial obligations as they are protected by limited liability.
Although they are part owners of the company, they do not operate the day-to-day activities performed; a board does this by means of a CEO. They have real power to influence managerial decisions.
The above diagram reflects the shareholders in any company. Let us discuss them in detail:
A group of people who live together in a community making decisions about how to do things and sharing the work that needs to be done.
They can vote on major company decisions such as when the company holds quarterly or annual meetings, shareholders can voice their concerns and feedback.
Not only do suppliers provide you with goods/services but they can give you vital information regarding that line of business. A business must have a trustworthy supplier as they can destroy the firm’s reputation in a split second.
The government is responsible for the environment and society where the business resides. The laws the government implement in the country will have a major impact on the company. Change in laws may affect taxation, employee-employer relationships, international trade laws and even codes of ethics and health & safety.
A creditor is any individual or institution that has provided value via money, goods or services to a company and expects to be repaid at a later date; they have no ownership in the business. Creditors are not to be confused with investors as investors invest to make an income through dividends or investment income while creditors lend money to the business.
When employees own a share in the business, business is better, pay increases and job satisfaction level elevates. In September 2013, employee shares were introduced in exchange to dismiss certain rights. Employee shareholder is the employment status. You may apply to become one if you want to, however, it is not a requirement. Six conditions must be considered before becoming an employee shareholder.
- The individual may not pay for the shares in any form
- The individual must seek external professional help and the company is required to pay for this consultation whether the individual takes the job or not
- The company must give the individual a detailed written contract
- The individual may not accept the offer until 7 days have passed after receipt
- Both parties must agree that the individual will become an employee shareholder
- The employer must give the individual fully paid shares in the company amounting to no less than GBP 2000
A manager is the executive or head of the department responsible for controlling and implementing within the business. They are determined to keep the quality of life within the environment at a high standard.
The owners are committed to the business, it’s environment and many other factors that contribute to the existence and survival of their business. They are the ones that invested all their time and resources into the company so naturally, they would be shareholders within their business.
The most loyal and supportive shareholders may just be the customers themselves. Some companies have boosted their investments all because their clients know the brand and are not hesitant to give them exactly what they need when they need it. The business will need to be transparent and have excellent communication skills. Many would argue that customers are not shareholders, however, customers have major power in the business and are affected by the goods or services that are provided. Take for example, passengers (like me) traveling on Southwest Airlines risk our lives once we step foot onto that aircraft.