The main difference between shareholder and stakeholder is that shareholder owns part of a public company through shares of stock, while a stakeholder has an interest in the performance of a company for reasons other than stock performance or appreciation.
Shareholders vs. Stakeholders
Shareholders are ever stakeholders in a corporation, but stakeholders are not always shareholders. A shareholder possesses part of a public company through shares of stock, while a stakeholder has a concern in the performance of a company for reasons other than stock performance or appreciation. A shareholder can vend their stock and buy different stock; they do not have a long-term requirement for the company. Stakeholders, however, are a leap to the company for a longer term and reasons of greater need. Shareholders concede part of a public company through shares of stock, and a stakeholder wants to see the company succeed for reasons other than stock performance. Shareholders don’t need to have a long-term standpoint on the company and can sell the stock whenever they need to on the other hand stakeholders are often in it for the long haul and have a greater need to see the company prosper. Shareholders would desire the company to focus on expansion, acquisitions, mergers and other activities that increase the company’s profitability and overall financial health whereas stakeholders concentrate on longevity and better quality of service. For example, the company’s employees may be interested in better salaries and wages, rather than on higher profitability.
What is a Shareholder?
A shareholder is any entity, company, or establishment that owns at least one share of a company’s inventory. Because shareholders are a company’s owners, they gather the benefits of the company’s successes in the form of raised stock valuation. If the company does badly and the price of its stock declines, however, shareholders can lose money. Shareholders usually receive declared dividends if the company does well and succeeds. If the company is getting eliminated and its assets sold, the shareholder may receive a part of that money, provided that the creditors have already paid. When such a situation comes up, the advantage of being a stockholder lies in the fact that they are not obliged to shoulder the debts and financial obligations incurred by the company, which means creditors cannot compel stockholders to pay them. The types of shareholders are given below:
- Common Shareholders: Common shareholders are those that own a company’s common stock.
- Preferred Shareholders: Preferred shareholders own a share of the company’s preferred stock and have no voting rights or any say in the way the company managed.
- To examine the company’s books and records.
- To sue the company for misdeeds of the directors and officers.
- To voting on major corporate matters, such as who sits on the board of directors and whether a proposed merger should occur.
- To receive a part of any dividends the company declares.
- To attend, in person or through a conference call, the corporation’s annual meeting to learn about the company’s performance.
- To elect by proxy through the mail or online when not attending a voting meeting.
- To receive an equal allocation of the proceeds if a company liquidates its assets (however, creditors, bondholders, and preferred stockholders have precedence over common stockholders).
What is a Stakeholder?
A stakeholder is whether an individual, group or organization who is affected by the outcome of a project. They have a concern in the success of the undertaking and can be within or outside the organization that is sponsoring the plan. Stakeholders can have a positive or negative outcome of the project. A stakeholder is a person, like any other member of the project, and some will be easier to manage than others. Stakeholders can strike or be affected by the organization’s activities, objectives and policies. Some examples of key stakeholders are lenders, administrators, workers, authority (and its agencies), proprietor(shareholders), providers, unions, and the community from which the business draws its resources. Not all stakeholders are equal. A company’s customers are entitled to fair trading practices, but they are not entitled to the same consideration as the company’s employees. A stakeholder is a personality who has a concern in your projector will be affected by its deliverable or output. It is important to understand the values and issues that stakeholders have so you can address them and keep everyone on board for the duration of the project. The types of stakeholders are given below:
- Internal Stakeholder: Internal stakeholders are people whose interest in a company comes through a direct relationship, such as employment, ownership or investment.
- External Stakeholder: External stakeholders are those people who do not directly work with a company but are affected in some way by the actions and outcomes of said business. Suppliers, creditors, and public groups are all considered external stakeholders.
- Shareholders are the holders of the company as they had bought the financial shares, issued by the company. Conversely, Stakeholders are interested parties who affect or gets affected by the company’s policies and objectives.
- The person retention the shares of the company is known as Shareholders. The group has a stake in the company or organization is known as Stakeholder.
- Shareholders are a team of Stakeholders. It also said that shareholders are stakeholders, but the stakeholders are not necessarily the shareholders of the company.
- The extent of stakeholders is comparatively wider than the shareholders because there are other constituents also apart from shareholders.
- Shareholders underline the return on their capital made in the company. On the other hand, Stakeholders focuses on the performance, profitability, and liquidity of the company.
- Simply limited liability partnerships by shares have shareholders. However, every company or organization have stakeholders, whether it is a government agency, nonprofit organization, company, partnership firm or a sole proprietorship firm.
Accordingly, shareholder and stakeholder are two different terms. Therefore, should not be confused while using them. Shareholders are just the legal owners of the company, who have got the proprietary by purchasing the shares of the company. Stakeholders is a slightly higher term than Shareholders, which comprises all those factors which affect the business. Not only business doing existence have stakeholders, but every organization irrespective of its size, nature, and structure are responsible to Stakeholders.