Stockholders are the ones who actually own a company. They are vested in its success and will are looking for ways to increase the value of their shares. They have significant influence on the company and thus it is important to always stand up for and protect their rights. 

There are many different types of stockholders, and each has his own responsibilities. So,  you must be aware of both in order to manage your company ethically and to safeguard the interests of your stockholders. 

Here, we look at the roles and responsibilities of stockholders and how they are expected to be actively involved in the company. 

What is a stockholder?

An individual or group that owns stock in a company is known as a shareholder. The number of a company’s stockholders can vary widely, from just a few to tens of thousands.  

In most jurisdictions, stockholders also have the right to bring a derivative suit on behalf of the company. This allows them to sue individuals or entities that have harmed the company, even if they are not directly involved in the wrongdoing. For example, if a defective product harms a company, the stockholders may be able to sue the manufacturer of the product. 

Publicly traded companies typically have the most stockholders, while privately held companies tend to have fewer.  

Stockholders typically purchase their shares through an initial public offering (IPO) or on the secondary market. 

Types of stockholders


There are two types of stockholders: common stockholders and preferred stockholders.  

  • Common stockholders 

Common shareholders are subject to declared common dividends as well as a vote on corporate matters. A person who has acquired at least a single common share of a corporation is referred to as a common shareholder. In the case of bankruptcy, common shareholders are compensated last, following preferred shareholders and debtholders. 

  • Preferred stockholders  

Preferred shareholders get dividend payments prior to common shareholders since they have preference over the company’s profits. They have the power to accept or reject important company decisions and they vote for the board of directors.

Role and responsibilities of a stockholder

In a liquidation, stockholders often get their hands on assets first. If a company goes bankrupt, the stockholders will receive their share of the assets before any other creditors. 

While the rights and responsibilities of stockholders can vary depending on the jurisdiction and the type of company, they are typically responsible for voting on the board of directors, making major corporate decisions, and receiving dividends. They may also bring a derivative suit on behalf of the company and are typically first in line to acquire assets in the event of liquidation. 

Examples of stockholders

We already know that there are two types of stockholders: common and preferred. Common stockholders have voting rights and can elect the company’s board of directors. Preferred stockholders do not have voting rights, but they are prioritized over common stockholders when receiving dividends and other distributions. 

There are many benefits to being a stockholder. For example, stockholders can make a profit if the company’s stock price increases. They also have a say in the company’s direction and can hold the board of directors accountable for their actions. 

There are some risks associated with being a stockholder as well. For example, stockholders may lose all their investments if the company goes bankrupt. Additionally, stock prices can be volatile, and stockholders may experience losses if the price falls. 

Importance of stockholder

The stockholders of a company are its most important asset. Without them, the company would not exist. They provide the capital that allows the company to grow and expand its operations. They are also vested in the company’s success and ability to generate profits. 

The stockholders are also the company’s ultimate owners. They have the power to choose the board of directors and to vote on major corporate decisions. They are also entitled to dividend payments on their shares. 

The stockholders play a critical role in a company’s success and its ability to generate shareholder value. They provide the capital that allows the company to grow and expand its operations. They also have a vested interest in the success of the company. 

Frequently Asked Questions

Stockholder equity is the residual value of a company’s assets after liabilities are paid. In other words, it is the value of a company that its shareholders own. This value can be calculated by subtracting the total liabilities from the total assets. Stockholder equity is an important metric because it represents the value that would be left over for shareholders if the company were to be liquidated. 

A stockholder is someone who owns shares in a company. A shareholder is someone who owns shares in a company and has voting rights. Shareholders who have voting rights can influence how the business is run. 

The terms “stockholder” and “stakeholder” are often used interchangeably, but there is a subtle difference between the two. A stockholder is someone that owns shares in a company, while a stakeholder is someone with interest in the success or failure of a company. In other words, a stockholder is an investor in a company, while a stakeholder may or may not hold a financial interest in a company. 

As a stockholder, you have certain rights and responsibilities. One of your fundamental rights is the right to vote on corporate matters. This includes electing the board of directors, approving corporate actions such as mergers and acquisitions, and ratifying the appointment of the company’s auditors.  

You have the right to go through the company’s financial documents as well. Another key right is the right to receive dividends if declared by the board of directors. Finally, you have the right to sue the company or its officers and directors if you believe they have breached their fiduciary duties. 

Preferred shareholders are typically given priority regarding dividends and other distributions, while common shareholders generally are last in line. Additionally, preferred shareholders usually have a fixed dividend, while common shareholders typically do not. Finally, preferred shareholders typically do not have voting rights, while common shareholders usually do. 

    Read the Latest Market Journal

    Weekly Updates 26/2/24 – 1/3/24

    Published on Feb 28, 2024 47 

    This weekly update is designed to help you stay informed and relate economic and company...

    All-in-One Guide to Investing in China via ETFs

    Published on Feb 27, 2024 230 

    Start trading on POEMS! Open a free account here! Why China? In the vast landscape...

    Navigating the Post-Inflation Landscape in 2024: Top 10 US Markets Key Events to Look out for

    Published on Feb 23, 2024 281 

    Start trading on POEMS! Open a free account here! In 2023, the United States experienced...

    From Boom to Bust: Lessons from the Barings Bank Collapse

    Published on Feb 23, 2024 60 

    Barings Bank was one of the oldest merchant banks in England with a long history...

    Decoding FX CFD 2.0

    Published on Feb 20, 2024 66 

    This article is aimed at availing information and knowledge essential to intermediate forex traders. It...

    Weekly Updates 19/2/24 – 23/2/24

    Published on Feb 19, 2024 89 

    This weekly update is designed to help you stay informed and relate economic and company...

    Unlock Prosperity with 5 Sure-Fire Financial Instruments!

    Published on Feb 14, 2024 197 

    In Singapore, the concept of guaranteed returns may evoke the spirit of prosperity, reminiscent perhaps...

    Weekly Updates 12/2/24 –16/2/24

    Published on Feb 13, 2024 70 

    This weekly update is designed to help you stay informed and relate economic and company...

    Contact us to Open an Account

    Need Assistance? Share your Details and we’ll get back to you


    This material is provided by Phillip Capital Management (S) Ltd (“PCM”) for general information only and does not constitute a recommendation, an offer to sell, or a solicitation of any offer to invest in any of the exchange-traded fund (“ETF”) or the unit trust (“Products”) mentioned herein. It does not have any regard to your specific investment objectives, financial situation and any of your particular needs. You should read the Prospectus and the accompanying Product Highlights Sheet (“PHS”) for key features, key risks and other important information of the Products and obtain advice from a financial adviser (“FA“) pursuant to a separate engagement before making a commitment to invest in the Products. In the event that you choose not to obtain advice from a FA, you should assess whether the Products are suitable for you before proceeding to invest. A copy of the Prospectus and PHS are available from PCM, any of its Participating Dealers (“PDs“) for the ETF, or any of its authorised distributors for the unit trust managed by PCM.  

    An ETF is not like a typical unit trust as the units of the ETF (the “Units“) are to be listed and traded like any share on the Singapore Exchange Securities Trading Limited (“SGX-ST”). Listing on the SGX-ST does not guarantee a liquid market for the Units which may be traded at prices above or below its NAV or may be suspended or delisted. Investors may buy or sell the Units on SGX-ST when it is listed. Investors cannot create or redeem Units directly with PCM and have no rights to request PCM to redeem or purchase their Units. Creation and redemption of Units are through PDs if investors are clients of the PDs, who have no obligation to agree to create or redeem Units on behalf of any investor and may impose terms and conditions in connection with such creation or redemption orders. Please refer to the Prospectus of the ETF for more details.  

    Investments are subject to investment risks including the possible loss of the principal amount invested. The purchase of a unit in a fund is not the same as placing your money on deposit with a bank or deposit-taking company. There is no guarantee as to the amount of capital invested or return received. The value of the units and the income accruing to the units may fall or rise. Past performance is not necessarily indicative of the future or likely performance of the Products. There can be no assurance that investment objectives will be achieved.  

    Where applicable, fund(s) may invest in financial derivatives and/or participate in securities lending and repurchase transactions for the purpose of hedging and/or efficient portfolio management, subject to the relevant regulatory requirements. PCM reserves the discretion to determine if currency exposure should be hedged actively, passively or not at all, in the best interest of the Products.  

    The regular dividend distributions, out of either income and/or capital, are not guaranteed and subject to PCM’s discretion. Past payout yields and payments do not represent future payout yields and payments. Such dividend distributions will reduce the available capital for reinvestment and may result in an immediate decrease in the net asset value (“NAV”) of the Products. Please refer to <> for more information in relation to the dividend distributions.  

    The information provided herein may be obtained or compiled from public and/or third party sources that PCM has no reason to believe are unreliable. Any opinion or view herein is an expression of belief of the individual author or the indicated source (as applicable) only. PCM makes no representation or warranty that such information is accurate, complete, verified or should be relied upon as such. The information does not constitute, and should not be used as a substitute for tax, legal or investment advice.  

    The information herein are not for any person in any jurisdiction or country where such distribution or availability for use would contravene any applicable law or regulation or would subject PCM to any registration or licensing requirement in such jurisdiction or country. The Products is not offered to U.S. Persons. PhillipCapital Group of Companies, including PCM, their affiliates and/or their officers, directors and/or employees may own or have positions in the Products. Any member of the PhillipCapital Group of Companies may have acted upon or used the information, analyses and opinions herein before they have been published. 

    This advertisement has not been reviewed by the Monetary Authority of Singapore.  


    Phillip Capital Management (S) Ltd (Co. Reg. No. 199905233W)  
    250 North Bridge Road #06-00, Raffles City Tower ,Singapore 179101 
    Tel: (65) 6230 8133 Fax: (65) 65383066