Shareholder
Overview
A shareholder (주주, Shareholder/Stockholder) refers to a person who holds shares by investing capital in a joint-stock company. Shareholders, as owners of the company, have legally recognized rights and obligations, and can obtain dividend income based on the company's performance or realize capital gains from stock price fluctuations. In the joint-stock company system, shareholders are key stakeholders, playing a central role in corporate governance and capital procurement.
Main Content
Rights of Shareholders
Shareholders have rights broadly divided into property rights and participation rights.
- Property rights: Include the right to claim profit dividends (dividends), the right to claim residual property distribution (upon company liquidation), and the right to demand share purchase (for dissenting shareholders in mergers/demergers).
- Participation rights: Include voting rights at general shareholders' meetings (principle of one share, one vote), the right to make shareholder proposals, the right to inspect accounting books, and the right to file derivative lawsuits. Voting rights, in particular, directly influence the appointment of management and major decision-making.
Types of Shareholders
- Common shareholders: Hold voting rights and are subordinate to preferred shareholders in dividend and residual property distribution, but can participate in management.
- Preferred shareholders: Have limited or no voting rights but receive priority in dividend and residual property distribution. Suitable for investors seeking stable returns.
- Major shareholders (controlling shareholders): Hold a certain percentage of shares and exercise substantial influence over company management. They may face conflicts of interest with minority shareholders and are subject to regulation.
- Minority shareholders (small shareholders): Have low equity stakes, making direct management participation difficult, but can protect their rights through collective action (shareholder alliances) or legal mechanisms (minority shareholder rights).
Responsibilities and Risks of Shareholders
Shareholders bear limited liability up to the amount of their invested capital. That is, even if the company goes bankrupt, they have no obligation to contribute additional personal assets. However, they must assume economic risks such as loss of principal investment (stock price decline), reduced dividends, and decreased stock value due to management failure.
Exercise of Shareholder Rights and Governance
Shareholders exercise their voting rights at annual general shareholders' meetings (once a year) and extraordinary general shareholders' meetings. Major agenda items include approval of financial statements, appointment of directors and auditors, dividend decisions, and amendments to the articles of incorporation. Recently, electronic voting and written voting systems have been introduced to facilitate participation by minority shareholders. Additionally, the spread of stewardship codes (active exercise of shareholder rights by institutional investors) has led to increased shareholder activism.
Relationship between Shareholders and the Company
Shareholders are the owners of the company, but daily management is handled by professional managers (CEO and board of directors), which can lead to agency problems. To address this, governance improvements such as strengthening board independence, introducing outside director systems, and tightening resolution requirements at shareholders' meetings are continuously being made. Furthermore, with the emphasis on ESG (Environmental, Social, Governance) management, the paradigm is shifting toward 'stakeholder capitalism,' which considers all stakeholders, not just shareholders.
Recent Trends
As of 2024-2025, major trends related to shareholders are as follows.
- Strengthening minority shareholder rights: In South Korea, starting in 2024, 'mandatory electronic voting at shareholders' meetings' and 'relaxation of requirements for exercising minority shareholder rights' have been implemented to protect minority shareholders. In particular, listed companies must send notices of shareholders' meetings electronically.
- Spread of shareholder activism: Global asset managers (BlackRock, Vanguard, etc.) and domestic pension funds (National Pension Service) are increasingly exercising active voting rights and making shareholder proposals. In 2025, cases of minority shareholder alliances demanding increased dividends and share buybacks at large corporations like SK and LG have increased.
- ESG and shareholder value: Due to mandatory climate disclosure (EU CSRD in 2025, Korea's sustainability disclosure standards), shareholders are incorporating companies' ESG performance into investment decisions. Non-financial factors such as carbon emissions, diversity, and human rights have a growing impact on stock prices.
- Digital shareholders' meetings: Non-face-to-face shareholders' meetings have become established since COVID-19, and in 2025, some innovative companies are attempting virtual shareholders' meetings using metaverse platforms.
- Shareholder return policies: Share buybacks and cancellations, interim dividends, and quarterly dividends are global trends. In South Korea, the introduction of the 'Corporate Value-Up Program' in 2024 is leading to an increase in shareholder return rates.
Related Topics
- [[Joint-stock company]]
- [[Dividend]]
- [[Voting rights]]
- [[Shareholders' meeting]]
- [[Minority shareholder]]
- [[Corporate governance]]
- [[ESG]]