A shareholder is What is the difference between a shareholder and an investor?

2024 Author: Henry Conors | [email protected]. Last modified: 2024-02-12 02:43

A shareholder is a natural or legal person, including a joint-stock company or a foreign company, which does not have the status of a legal entity, but has civil legal capacity in accordance with the laws of a foreign state. The shareholder may be the Russian Federation, its subject or municipality, which own one or several shares of the capital of a joint-stock company.

Shareholders and Management

A shareholder is a person who, together with other persons having this status within the company, is a representative of the management body of the company. Any decisions within the organization are made at the shareholders' meeting, both at the regular and extraordinary meetings. The volume of the block of shares determines the rights of shareholders in relation to the company. This can be both the right to nominate a candidate to the board of directors, and the right to put an issue on the agenda of the general meeting. The size of the block of shares does not in any way affect the right of a shareholder to take part in the meeting and the right to receive dividends. Dividends are calculated according to the size of the shareholding, butonly if the decision to pay them was made at a scheduled meeting.

Investors and management

An investor can be both a legal entity and an individual who invests his capital in investment projects. The investor is more interested in projects that are able to minimize risks. The participants of the joint-stock company are interested in promoting projects in order to increase dividends through active participation in their development. The investor has no such right. He simply considers the project, analyzing its actual state and prospects, makes a decision.

What are shareholders?

A shareholder is the owner of certain shares, the type of which determines his belonging to one or another category. Can be distinguished:

• owner of ordinary shares;
• owner of preferred shares.

Depending on the volume of assets, the following categories are distinguished:

• sole shareholder who owns 100% of the shares;
• majority or large, which owns a majority stake, giving him the right to participate in the management of JSC;
• minority shareholder, owns less than 50% of voting shares;
• a retail shareholder is a person who owns the minimum amount of shares, allowing only to participate in the general meeting and giving the right to receive dividends.

With only 1% of the shares, an individual or legal entity alreadyhas the full right to take part in the selection of candidates for the board of directors of the company. As for the investor, no matter how much he invests in a project or in a company, he will not receive this right. The maximum similarity between the two participants in the financial market can be seen only if we compare the investor and the retail shareholder. In this case, the latter will have a certain advantage in terms of the right to participate in the general meeting.

Difference in Opportunity

If we consider shareholders and investors in the context of possible prospects for earning, we can talk about the presence of more diverse tools for the latter. The investor has everything necessary for investing funds not only in JSCs, but also in precious metals, currencies, securities, including shares, but without obtaining the right to take part in decision-making regarding the activities of the company in which he invested. It should also be said that in case of bankruptcy of the project, the investor does not receive anything. The shareholder has the full right to claim his share, in accordance with the block of shares, counting on the capital of the organization, which remained after the payment of all debts. This right covers not only the material base of the enterprise, but also the property on its balance sheet (equipment, machinery, real estate, etc.).

Shareholders and investors - a striking similarity in the example of Gazprom shares

Gazprom shareholders and people who decide to invest their funds in a large Russian company are, in fact, the same persons, however,only if we consider work with small capitals. Investments can be very different, including investing in the purchase of shares, which determines the presence of colossal similarities. Meetings of shareholders for shareholders and investors in parallel are held systematically, but to take part in them or not, this is an individual decision for everyone. Possessing a minimum share of the rights to own the company, an individual or legal entity cannot influence changes in the rules of its work. Gazprom shareholders (and investors in parallel) purchase assets either through a bank, or with the support of a brokerage company, or on the MICEX and RTS exchanges. Small capital investors and shareholders in most situations do not wait for dividend payments, decisions on the implementation of which are made at the meeting. They catch the moment of a rise in the price of shares and sell them, earning on the difference in prices. This trend is relevant only for small shareholders and investors. Large participants in this market segment have larger plans and goals.

What is the difference between a shareholder and an investor in Sberbank?

As in the situation with Gazprom, there is no difference between small shareholders and investors, since investing in the country's largest financial institution is possible only through the purchase of shares, which automatically transfers a financial market participant from one category to another. Sberbank shareholders who own preferred shares that do not provide access to participation in the meeting can safely be namedinvestors in the full sense of the term. Sberbank shareholders who have access to meetings and acquire assets in order to participate in the work of a financial institution are guided by long-term prospects. Modern investors, after the global crises of the last decades, prefer investing in a project with a short payback period, no more than 2-3 months.

Shareholder, as one of the subcategories of investors

The role of an investor can be assigned to both an individual and a legal entity, which can manage not only their own, but also borrowed funds. When using his capital, the investor is called an individual. If the latter uses the borrowed funds in its work, it receives the status of an institutional one. There is a division of investors into direct and portfolio. Portfolio set the goal of increasing capital. Shareholders are direct investors who invest in the company's assets with the primary goal of obtaining certain powers in the aspect of its management.