Many people are familiar with the term shareholder in connection with listed companies. In principle, shareholders as well as managers, employees and lenders belong to the stakeholders of a company.
- Shareholders are people who own shares in a company and are therefore shareholders.
- Shareholders can attend the annual general meeting and exercise their voting rights there to influence company decisions.
- The term shareholder value describes the value of a company among stock market experts, which depends on the market value and the number of shares issued.
- While a stock corporation operating according to the shareholder approach focuses primarily on the interests of its shareholders, the interests of all stakeholder groups are taken into account in the stakeholder approach.
What is a shareholder?
The term originally comes from English and translated means shareholder. By definition, a shareholder denotes a shareholder in a stock corporation. It is either a natural or a legal person who owns shares in a group. This means that shareholders belong to the so-called internal interest groups.
Most people buy securities through a broker in the financial market. However, there is also the option of becoming a shareholder by founding a listed company (original acquisition) or through an inheritance (derivative acquisition). The basic goal of a shareholder is to participate in the success of the company in question and to receive income for his commitment.
The rights of shareholders
The Stock Corporation Act (AktG for short) provides information about the rights of shareholders in a company. A general distinction is made between administrative rights (also known as rights of domination) and property rights.
A shareholder’s administrative rights
Every holder of a common share has the right to attend the company’s annual general meeting. For many shareholders this aspect is in the foreground, but registration is required. Shareholders also have voting rights at the Annual General Meeting. This allows them, for example, to have a say in the question of how the balance sheet profit is used or the election of the supervisory board. In addition, under certain circumstances it is possible to contest resolutions of the general meeting.
The right to information also falls into this category. It is intended to ensure that shareholders receive information on all matters of importance and exercise their voting rights on this basis.
A shareholder’s property rights
One of the most important property rights is the dividend distribution, i.e. the right to the balance sheet profit. However, the company does not necessarily have to pay a dividend to its shareholders. There is also the possibility that the stock corporation withholds the profit in order to finance further company growth. The amount of the amount depends primarily on the company’s share of the company’s share capital. In addition, shareholders have a subscription right. It guarantees the shareholder that he can purchase shares in the event of a capital increase in order to keep his previous stake.
What does shareholder value mean?
Shareholder value is a technical term for company value. This corresponds to the product of the number of shares available on the market and their market value. Many companies focus their actions on maximizing the company valuation in the interests of their shareholders. Stock corporations achieve this by reducing costs and / or innovating in their product portfolio, among other things.
Stakeholders and Shareholders
All stakeholders in a company are considered to be stakeholders. It is about all people and groups of people who have an interest in the activities of the stock corporation – for example because the activities affect them directly or indirectly. A distinction can be made between internal and external stakeholders. In addition to shareholders, internal interest groups also include management and employees. External stakeholders include, for example, customers, suppliers, creditors and the state. In principle, every listed company has to decide whether to focus its actions primarily on shareholders or stakeholders.
The shareholder approach
If a company adopts the shareholder approach, it primarily focuses on serving the interests of its shareholders. The primary goal of management is therefore to increase sales and profits and, as a result, the share price. If possible, the company also safeguards the interests of other stakeholders. However, it only takes them into account if they do not conflict with the company’s success. The majority of listed large corporations act primarily according to the shareholder approach. However, numerous voices criticize such a one-sided concentration of interests.
The stakeholder approach
The stakeholder approach aims to meet the demands of both internal and external interest groups. The company focuses on finding compromises with which all stakeholders are satisfied. The basic assumption of the approach is that a company can only survive in the long term if its goals are in harmony with those of its stakeholders. The approach thus represents a departure from the management theory that has prevailed for decades.
