The terms “stakeholder” and “shareholder” are often used interchangeably in a business. Both of them have a keen interest in the company and are impacted by it, however, both these terms are different.
What is a Stakeholder?
Stakeholders can be a person, group or organization that has an active interest in the functioning of an organization. Stakeholders can affect or are affected by the changes in the business.
Stakeholders are of two types, internal and external. Internal stakeholders are people whose interest in the company is due to a direct relationship, such as employment, ownership or investment.
External stakeholders are those people who do not directly work with a company but are affected in some way by the actions and outcomes of the business. Creditors, suppliers, and public groups are all considered examples of external stakeholders.
What is a Shareholder?
A shareholder is any person or an institution that owns one or more shares in a company. Due to the holder of a share in a company, they can be regarded as partial owners. They receive monetary benefits in the form of dividends as and when the company earns profit from the market.
Shareholders do not engage in the management of a firm’s operations. A board of directors set up by the shareholder looks after the operations.
Also Check: How to Become a Shareholder?
There are two kinds of shareholders, those who own less than 50% of a company’s stock are known as ‘minority shareholders’, whereas the shareholders who control 50% or more of a company’s stock are called ‘majority shareholders’.
Let us look into the major differences between stakeholders and shareholders in the following table.
|Basis of Comparison||Stakeholders||Shareholders|
|Definition||Stakeholders are individuals or organization that has an active interest in the functioning of a company||Shareholders are individuals or organizations who are the holders of one or more shares of the company.|
|Who are they?||Interested parties||Owners|
|Impact||The events in a company can directly or indirectly impact stakeholders||Shareholders are always directly impacted by events in a company|
|Roles||Stakeholders cannot be shareholders in a company||Shareholders are stakeholders in a company|
|Monetary Benefit||Not all stakeholders receive monetary benefit||All shareholders receive monetary benefit|
|Types||They can be of various types such as employees, creditors, government, suppliers, customers||There are two types of shareholders, namely, equity shareholders and preference shareholders.|
|Focus Area||The performance of the Company||Majorly focused on the return on investment (ROI)|
For a student of Commerce and Management, this article is of considerable significance as it deals with the critical concept of the fundamental differences between stakeholders and shareholders. More such exciting concepts are coming up. Stay tuned to BYJU’S.