Many companies will have shareholders and stockholders to purchase shares and stocks for them. They need them so that their profit in that company will improve.
Their work is to invest their money in purchasing the shares. They can even do this as an individual, or they will approach it as a group. It depends on the type of company.
Key Takeaways
- Shareholders and stockholders both own shares in a company, granting them partial ownership and rights to profits.
- The terms are used interchangeably, but “stockholder” specifically refers to owners of common or preferred stock.
- Both shareholders and stockholders have voting rights and may receive dividends, depending on the company’s performance and the type of shares they own.
Shareholder vs Stockholder
In investing, a shareholder is a group or an individual that is responsible for investing money in shares of a company. They prioritise the return on their investments. A stockholder is a person that owns a stock of a company. They prioritise the performance of a company.
A shareholder is a person who will invest their money in terms of shares. They can be a single person or a group of people. Their main work is to invest the money in terms of shares.
Based on that, they will improve the company’s profit. Shareholders are important for all companies. No matter whether the company is small or large, it will have a shareholder to invest in them.
A stockholder is a person who holds the stock of a particular company or will buy the stocks directly from the stock market. Their main work is buying stocks of that company.
Sometimes, stockholders will also lose their money if something in that company does not go well. This will lead to a loss for the person who purchased stocks.
Comparison Table
| Parameters of Comparison | Shareholder | Stockholder |
|---|---|---|
| Definition | The person owning the company’s shares are called Shareholders | A person who has a stake in the company is called Stockholder |
| Evolution | 1830 | 1753 |
| Main Focus | Investment returns | Company performance |
| Includes | Equity and preference | Shareholders, government suppliers, and creditors |
| Company | Companies that are limited with shares will have shareholders | All companies will have stakeholders |
What is Shareholder?
A shareholder can be either an individual or an institution that will own the shares of public or private companies. It can even be an organization as well. They can even do this as partners.
To become a shareholder in a company, you should have owned at least one share in that company. The main role of the shareholder is to invest their money in that company by purchasing its shares.
The shares can be purchased in certain percentages. If that person is the only shareholder in that company, then they have to purchase the maximum number of shares.
If they are not the only shareholders in that company, then the other shareholders will purchase the shares along with them. Every company will have a shareholder.
Having a shareholder will help in improving the business. They will help in raising funds from the investors.
Shareholders who invest their money in the form of shares will not give any return investment for the money they invested. Even they cannot get their original payment from the company.
Shareholders are very important so that the company will feel secure. They will provide much-needed financial security to the company. Shareholders can get money in two forms: either by dividend or by capital appreciation.
There are some disadvantages available, but that depends on the type of company. Shareholders concentrate mainly on the equity and preference side.
What is Stockholder?
A stockholder is a single person or group of companies that will own the stocks of the shares invested by the shareholders. This kind of stock investment is also known as equity.
They will own the shares in terms of joint companies. Shareholders will own the shares of the company, and these shareholders can be the company’s owners as well. Taking care of the shares in terms of stock is the main work of the stockholder.
Most people think that these two terms are the same and they don’t have any difference. But they are not the same. They have some differences in them.
But sometimes, they are synonymous with shareholders. But this is not the case all the time. Stockholders will not own the company. They will just own the securities. If they are in the law and practice, they can’t make any final decision for the company.
You can easily become a stockholder just by purchasing the stocks of that particular company. You don’t need to buy anything apart from buying stocks of that company.
You can even buy stocks from the stock market. You need not buy them from the company. Some people will even buy them from a stock company.
Main Differences Between Shareholder and Stockholder
- A shareholder is a person who purchases shares from a particular company. On the other hand, a stockholder is a person who purchases stocks from a company.
- A shareholder will purchase shares from only a company. However, a stockholder will purchase stocks either from a company or from a stock market.
- The practice of shareholder came from 1830. On the other hand, the stockholder came from 1753.
- The main focus involved for shareholders is investment returns. On the other hand, the main focus for stockholders is the performance of the company.
- Shareholders will include equity and preference. On the other hand, stockholders will include shareholders in them.
- https://books.google.com/bookshl=en&lr=&id=QugwjSRiuQoC&oi=fnd&pg=PA325&dq=Difference+Between+Shareholder+and+Stockholder&ots=IqB0YjHRQO&sig=2PRNnOTvqUySw-9loGQblQtyxNQ
- https://onlinelibrary.wiley.com/doi/abs/10.1002/smj.4250110408
Last Updated : 23 August, 2023
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Chara Yadav holds MBA in Finance. Her goal is to simplify finance-related topics. She has worked in finance for about 25 years. She has held multiple finance and banking classes for business schools and communities. Read more at her bio page.
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