The shares of a company are a participation of the capital of an organization as a form of investment in the short or long term. In this sense, a large number of shares can be offered in the stock market to expand organizational projects. In this way, there may be companies without a majority shareholder because they offer many shares that exceed the investment of the founders or a specific shareholder . Find out what it means to be the majority shareholder of a company!
What is a majority shareholder?
A majority shareholder is an individual, company, company or government entity that owns more than 50% of the offered shares of a company . In this way, these shareholders have the largest investment within the company and, therefore, have more power than the rest of the shareholders. In addition, they have special rights in accordance with the particular interests of the organization.
Likewise, due to their characteristics, majority shareholders are also often called controlling shareholders because of the power they possess within the company . In this way, by outperforming the rest of the shareholders combined, they have a greater influence on decision-making.
However, not in all cases the owners or founders of the company or society are the majority shareholders . In this sense, since 2014, Bill Gates ceased to be the majority shareholder of Microsoft Corporation , although it is estimated that he no longer owns shares. Furthermore, in the case of Microsoft there is no partner with more than 50% of the shares, since the largest shareholder is Vanguard Group Inc with 8.34%.
Duties of the shareholder with the largest participation
Although majority shareholders have greater power, they also have duties that they must fulfill to ensure the proper functioning of the company.
- The shareholder with the largest stake should allow the other shareholders to review transactions within the company and ensure fairness . In this way, the operations or sales of part of their participation in the company must be transparent, fair and legal.
- A majority shareholder must invite the other shareholders to participate in the important decision-making of the company . In addition, you must request the approval of high investments that will also affect the investments of the rest of the shareholders.
- A majority shareholder must respect the right of the rest of the common shareholders to vote in the important decisions of the company . In this way, minority shareholders can participate in the modification of the company’s bylaws and internal regulations.
- The majority shareholder must inform the other shareholders in advance about the annual or special meetings . In addition, you must inform the reason for the meeting and, if applicable, send in advance the documents to be discussed.
- A majority shareholder must encourage harmony among all shareholders and avoid conflicts as much as possible . In this way, you should not take individualistic actions without consulting with others.
- The majority shareholder must protect both his investment and that of the rest of the shareholders, since the gains or losses must affect everyone . In this regard, you should inquire about the salaries, bonuses and all the benefits of the company.
- A majority shareholder must guarantee compliance with the statutes, regulations and obligations of the company and of all shareholders . In addition, it must allow the other shareholders to evaluate compliance with all regulations that influence the company and its duties.
Advantages of being the majority shareholder of a company
Being the majority shareholder of a company represents some particular benefits that make it stand out from the rest of the shareholders.
- The majority shareholder or shareholders with the largest stake have the power to make important decisions. In this sense, they can define short-term and long-term objectives and cancel decisions that are contrary to their interests .
- This type of shareholder has greater control of the company’s management, being the leader or president of the board of directors . In this way, you could hire and fire staff and develop new projects in line with the interests of the company.
- The majority shareholder can elect the members of the board of directors or board of directors . In this sense, it has a greater influence on the administration and management of the company.
- A majority shareholder has the power to retain its stake in the event of mergers or acquisitions of new companies . In this way, if you wish, you can protect your percentage of shares within the company.
- The shareholder with the largest stake is the person or organization that receives the greatest amount of profit from obtaining resources. In this sense , it enjoys more economic benefits than the rest of the combined shareholders of the company .
- This type of shareholders, having a greater investment, can supervise the management of the company to avoid actions that may affect their interests . In this way, they help to make management more efficient and effective, and to protect the investment of the rest of the shareholders.
Disadvantages of being the majority shareholder
The majority shareholder, in some cases, may abuse the power to make decisions without consulting that may not be in accordance with the collective interests.
- The majority shareholder, having a greater investment, is the most affected in times of crisis in the company. In this sense, it is the person or company that can assume the greatest loss in the event of reductions in sales or the stoppage of activities .
- Majority shares can generate a conflict of interest, since the majority shareholder will not always agree with the minority shareholders . In this sense, for important decisions there are usually controls that limit the power of majority shareholders to prevent them from abusing their authority.
- You can limit managers when making decisions and create bureaucracy in the company to have better control of your investment.
- The majority shareholder can abuse its power to pressure minority shareholders to force them to sell their stake and have full control.
conclusion
The majority shareholder of a company is the person who has a greater participation and, therefore, more benefits . However, these types of shareholders are those who have a greater risk of losses due to reduced sales or economic crises.
In addition, although these shareholders have greater power, they are limited by the bylaws and internal regulations of the company . In this way, in the event of irregular actions, they can be sued and forced to sell their shares or dissolve the company.
