Shareholders are usually grouped in two ways. By the class of shares they hold, there are common shareholders, who typically have voting rights, and preferred shareholders, who get priority on dividends but usually can't vote. By who they are, shareholders include insiders, institutional investors, retail investors and passive investors. Below, we explain all six types of shareholders and the rights each one has. 

The 6 main types of shareholders

1. Common shareholders

Common shareholders own common stock (also called ordinary shares) in a company. They usually have voting rights at shareholder meetings, including the AGM, where they can vote on matters such as electing directors and approving auditors. They share in the company's profits through dividends and can benefit from capital gains if the share price rises. If the company is wound up, however, they're paid last.

2. Preferred shareholders

Preferred shareholders have a higher claim on the company's assets and dividends than common shareholders. Their dividends are typically paid first, and often at a fixed rate. In return, they usually don't have voting rights. If the company goes bankrupt, preferred shareholders are paid out before common shareholders.

3. Insiders

Insiders are people directly involved with the company, such as executives, directors and board members, who hold shares because of their role. Because they have access to non-public information, their share dealings are usually subject to strict rules and disclosure requirements.

4. Institutional investors

Institutional investors are large organizations, such as pension funds, mutual funds, insurers and asset managers, that invest on behalf of others. Because they often hold large stakes, they can have significant influence over shareholder votes.

5. Retail investors

Retail investors are individuals who buy and sell shares for themselves, usually through a broker or an online trading platform. Each one typically holds a small stake, but together they can make up a large part of a company's shareholder base.

6. Passive investors

Passive investors hold shares for the long term rather than actively trading them, often through index funds. They tend to focus on long-term growth rather than short-term price movements.

The rights of each shareholder ultimately depend on the class of shares they hold and on the company's articles of association or shareholder agreements.

Common vs preferred shareholders: the key differences

  • Voting rights: common shareholders usually vote; preferred shareholders usually don't.
  • Dividends: preferred shareholders are paid first, often at a fixed rate. Common shareholders' dividends can vary and aren't guaranteed.
  • Priority if the company is wound up: preferred shareholders are paid before common shareholders.
  • Growth potential: common shareholders benefit most if the company's value rises.

Why shareholder types matter for your AGM

Different types of shareholders take part in meetings in different ways. Institutional investors often vote by proxy ahead of the meeting. Retail investors are more likely to want to attend, ask questions and vote on the day. Making it easy for every shareholder to take part, whether in the room or online, is a big part of running a fair, well-attended AGM.

Learn more about what a virtual AGM is and how it works, or read our guide to AGM legal requirements and best practices.

Frequently asked questions

What are the main types of shareholders?
The two main classes are common shareholders and preferred shareholders. Shareholders can also be grouped by who they are: insiders, institutional investors, retail investors and passive investors.

Do all shareholders have voting rights?
No. Common shareholders usually have voting rights, while preferred shareholders usually don't. The exact rights depend on the share class and the company's articles of association.

What is a majority shareholder?
A majority shareholder owns more than 50% of a company's voting shares, which gives them control over most shareholder decisions.

What's the difference between a shareholder and a stakeholder?
A shareholder owns shares in a company. A stakeholder is anyone affected by the company, including employees, customers, suppliers and the local community, as well as shareholders.

Planning your next shareholder meeting?

Lumi Global helps companies run in-room, hybrid and virtual shareholder meetings that make it easy for every shareholder to take part. Talk to our team about your next AGM.