Shareholders Own the Corporation
Shareholders own the corporation because a share denotes a unit of ownership.3 min read
Shareholders own the corporation because a share denotes a unit of ownership. The number of shares a particular shareholder owns, with respect to the total number of shares issued by a corporation, denotes how much ownership he or she has in the corporation.
Shareholders or stockholders are the owners of shares in a corporation. A shareholder may own just one share or even thousands of shares. Earlier, stock certificates were issued to denote the number of shares owned by a shareholder. However, nowadays, most of the corporations only track the number of shares owned by different shareholders of the company. You may be the only shareholder of a corporation or one among thousands of shareholders.
Generally, there is no restriction on the type of entity that can become a shareholder of a corporation. Almost anyone, including an individual, partnership business, Limited Liability Company (LLC), and another corporation can become a shareholder of a corporation. Moreover, a shareholder may or may not be a U.S. citizen.
What Is Ownership Interest?
A share denotes your ownership interest or how much of the corporation you own. For example, if you own 100 shares of a corporation that has issued 1,000 shares, your ownership in the corporation is 10 percent. Similarly, if you hold all the 1,000 shares, you own 100 percent of the corporation. Sometimes, even if you own more than 1,000 shares in a large corporation, your ownership may still be less than one percent. It all depends upon the total number of shares issued by a corporation.
Shares make it easy to sell your ownership interest in a corporation. In case of publicly traded corporations, you can sell your shares through online trading or your broker. However, it takes more efforts to sell shares of a private company since you'll have to find the interested buyers on your own without any support of a trading platform. Moreover, a shareholder's agreement may put restrictions on when and whom you can sell.