Even when you own a fraction of a share of a company, you are still considered a whole shareholder. (We often use the term “stockholder” in the U.S. and Canada.) A fractional-share investor will enjoy many of the same privileges as whole-share investors. Shareholders can’t make day-to-day operating decisions for a company, but they can vote on big decisions, attend the annual shareholders meetings, get dividends, exclusive discounts, and technically they own their percentage of the company and everything in it: offices, computers, vending machines, ping-pong tables, plastic ficus plants- everything.
Why would a company want strange people owning them? Well, when a company wants to raise money to keep growing but they don’t want to borrow money from a bank, the board of directors can decide to sell it to the public. This is called an initial public offering or an IPO. Once a company “goes public,” their stock can be bought and sold by anyone who can afford it. Here are a few of the benefits of owning stock:
1. Annual Reports
As a shareholder, you are sent a hard or digital copy of your company’s annual report. It’s a comprehensive paper on the activities and financial dealings of the company for the previous year. They’re usually pretty dull and dry, but some companies have made an effort to keep it interesting. Take a look at annual reports for over 5,000 companies right here.
2. You get a vote!
Learn more about what you can vote on and how (via email, snail mail, in person), right hereat Investor.org.
3. Annual Shareholders Meeting
It’s like a gigantic board meeting, and every shareholder has a seat at the table. Amazon’s meetings are fairly staid, but this year the world’s largest e-tailer attracted some protesters which livened things up a bit. Warren Buffett’s company, Berkshire-Hathaway, hosts a meeting that has been called the “Woodstock for Capitalists.” The 3-day agenda kicks off with a “Shareholder Shopping Day” for discounts on B-H products. After the actual meeting, there’s a family-style picnic, and on Sunday, there’s a fun-run to help you “invest in yourself.” Read more about this year’s meetinghere. Thanks, Warren!
4. You own X% of everything the company has
Want to figure out how much you own of a company? Here’s the handy formula:
# of shares owned
____________________ X 100% = percentage of the company that’s all yours!
# oftotal shares
5. Dividends
When companies make money, they can distribute it to their shareholders as a dividend, or keep it and use it to run the company. Some companies like co*ke (co*kE) and Disney (DIS) are known as “dividend stocks” because they frequently give out cold, hard cash to shareholders.
6. Freebies and Discounts
Not all companies shower their shareholders with freebies and discounts, but a fewlike Ford (F), McDonald’s (MCD) and Royal Caribbean Cruises (RCL) do.
7. Shareholder Swagger
Shareholderdom affords you some legit Wall Street cred. You are part-owner of a company. Or many companies! How cool is that?! Enjoy your newly-earned status as a Wall Street investor!
FAQs
Shareholder perks can include offering products and services, or discounts, to investors that are currently invested in the stock. While most investors are focused on the financial benefits of owning a stock, like its price increase or being paid a dividend, other investors look for companies they relate to.
What are the perks of being a shareholder? ›
Shareholder perks can include offering products and services, or discounts, to investors that are currently invested in the stock. While most investors are focused on the financial benefits of owning a stock, like its price increase or being paid a dividend, other investors look for companies they relate to.
Do shareholders get free stuff? ›
For most companies, that simply means sharing in dividends and hoping that the stock price goes up over time. However, some companies treat their shareholders like real owners - giving them discounts and rewards on products and services, just like their employees would get.
Do you get discounts if you are a shareholder? ›
But some companies do still offer perks to shareholders, although none are so generous. Some are available to owners of just one share; others only become available after you've invested rather a lot of money.
What happens if you become a shareholder? ›
You will share ownership with the other shareholders, and your influence over the corporation will depend on how many shares you have purchased. When a stockholder purchases shares in a company, they can benefit in two important ways: Receiving dividends from the shares and a portion of the company's profits.
What can a 25% shareholder do? ›
No matter how many shares you have, there are certain rights that you can exercise. Shareholders holding 25% or more of the shares in the company have the power to block some key decisions the company may wish to make, as these decisions require a 75%+ majority (passed by way of a 'special resolution').
Do all shareholders get paid? ›
Profits made by limited by shares companies are often distributed to their members (shareholders) in the form of cash dividend payments. Dividends are issued to all members whose shares provide dividend rights, which most do.
What do they pay shareholders? ›
Dividends are payments a company makes to share profits with its stockholders. They're paid on a regular basis, and they are one of the ways investors earn a return from investing in stocks.
What do shareholders give? ›
The shareholder is the owner of the company that provides financial security for the company, has control over how the directors manage the company, and also receives a percentage of any profits generated by the company.
What are the disadvantages of being a shareholder? ›
Disadvantages
- They can face losses.
- Not all companies pay out dividends.
- They may receive nothing if the company faces bankruptcy.
- They have limited rights.
In many companies, the articles of association may stipulate that shares may only be sold or given to an existing member, or a family member of an existing shareholder. The articles may also express the company's right to buy back any available shares.
What value do shareholders bring? ›
Shareholder value is the value given to stockholders in a company based on the firm's ability to sustain and grow profits over time. Increasing shareholder value also increases the total amount in the stockholders' equity section of the balance sheet. A well-managed firm maximizes the use of its assets.
What can a 75% shareholder do? ›
Special resolutions
A special resolution is one passed by at least 75% of the shareholders present in person or by proxy and entitled to vote at a general meeting. Notice of not less than 21 days' notice must be given to the members, specifying the intention to propose the resolution as a special resolution.
Do shareholders get salaries? ›
Shareholders, if they perform work for the business, are also considered employees and must earn a salary.
What can a 10% shareholder do? ›
10% or more: can demand a poll vote at a general meeting; 5% or more: a shareholder is able to require circulation of a written resolution and can require a general meeting to be held.
What are the risks of being a shareholder? ›
Risks to shareholders
- Directors duties. ...
- Reliance on profitability and dividends. ...
- Control over management. ...
- Selling shares and exiting the company. ...
- Insolvency.
