What is Majority Shareholder? Definition of Majority Shareholder, Majority Shareholder Meaning
A majority shareholder is that figure, physical or legal, that concentrates a large volume of shares in a company and, therefore, has the capacity to control it. Frequently, this occupies a predominant and directive position.
Within the different existing shareholding distributions , the figure of the majority shareholder is usually identified with holders of at least half of the shares of a commercial company .
It is often considered that the power and influence of a shareholder in a given company is greater, as its participation in the shareholding increases.
In this sense, the majority shareholders acquire an important weight when making decisions and managing the economic and strategic drift of their companies. This happens by having the capacity to control and have access to boards of directors and senior management bodies of said companies.
It should be noted that, in multinational or large companies, the existence of this shareholding modality is less frequent. In these cases, share ownership is more atomized, so power is distributed more democratically.
Outstanding characteristics of the majority shareholder
There are a series of notable features that characterize the profile of the majority shareholder.
They stand out from them:
- Personality: Such shareholders may take the form of both individual as a legal person . There are often shareholder groups or unions that act jointly.
- High decision-making capacity: They have great control over companies, reaching positions of influence and responsibility. Alternatively, there are cases of majority shareholders delegating this responsibility to external professionals or to a CEO or general manager .
- Right to economic inventions: The foregoing translates at the same time into the right to benefit and collect a higher level of dividends or profits from the business.
- Identity: In many cases, these types of shareholders own their predominant volume of shares because they are creators or founders of the company.
The role of the majority shareholder, in the day-to-day business and organization, is monitored and regulated by the bylaws of each company.
Said framework of action seeks that the control and direction of these figures does not cause detriment to the interests of minority shareholders .
In this way, the aim is to avoid possible cases of corporate despotism or the adoption of unfavorable business strategies for them.