A stockholder is a person or entity that owns shares in a corporation. A stockholder is accorded certain rights in respect to the shares held, which most commonly involve voting for members of the corporate board of directors and voting on certain policy issues, as well as receiving any dividends authorized by the board.

A stockholder has the lowest priority for receiving payment in the event of a corporate liquidation, with secured and general creditors being entitled to full payment before any residual amounts are paid out to stockholders. This can mean that shareholder investments may be entirely lost in the event of a corporate liquidation.

A stockholder may own the preferred stock or common stock of a corporation (or both). Preferred stock may have special voting rights, dividends, and other features that are not available for common stock.

A stockholder may acquire shares in the primary market when a company initially issues shares to the investment community, which means that the payee is the issuing corporation. However, most stockholders acquire shares on the secondary market, and so are paying current stockholders to acquire their shares.

Similar Terms

A stockholder is also known as a shareholder.

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