Shareholders can be either natural persons or legal entities such as corporations. Depending on the type of company, shareholders may have different rights and duties. For example, in a public company, shareholders elect a board of directors to oversee the management of the company. Internal stakeholders are the people within a company whose interest comes from ownership or investment.

• A group of stakeholders in a company experiences the direct effects of that company’s performance and decision-making.
• They do not receive the same payment considerations that an employee would have.
• Some examples of internal stakeholders include employees, the board of directors, project managers, owners, and investors.
• A stakeholder is anyone that has an interest or is affected by a corporation or other organization.

For example, Asana lets you create and assign tasks with clear due dates, comment directly on tasks, organize work into shareable projects, and send out automated status updates. That way, you can give stakeholders the information they need, when they need it. Because shares of stock are easily sold, stakeholders’ interests in a company are often more complex, as it’s generally easier for a shareholder to cut ties with a company than a stakeholder. If you have shares of stock, you may have received a proxy notification from the company. Since many shareholders are not able to attend the annual meeting, they can vote by proxy.

What is a Shareholder?

Whether you’re managing stakeholders or shareholders, ProjectManager has you covered. Our project management software helps leaders manage projects online with their team, and keeps stakeholders and shareholders informed along the way. Therefore, shareholders are owners and stakeholders are interested parties.

• The suppliers may be interested in timely payments for goods delivered to the company, as well as better rates for their products and services.
• In this respect, the organization is the customer of other organizations.
• Stakeholders and shareholders will love the transparency ProjectManager gives them into the project.
• Management can also become part of various committees or give demonstrations, presentations or lectures to provide learning experience to the potential customers.
• On the other hand, stakeholders have no such legal entitlements but still have an interest in the success of the business.
• Historically, shareholder theory has been widely accepted and used, noting that a corporation’s duty is to maximize shareholder returns.

This way, stockholders also indirectly affect the company through the stock market. Shareholder is a person, who has invested money in the business by purchasing shares of the concerned enterprise. On the other hand, stakeholder implies the party whose interest is directly or indirectly affected by the company’s actions.

Company ownership

Stakeholders can also include community groups, activists and government entities that monitor and regulate the industry. While stakeholders may not impact a stock’s value directly, they influence how the company is perceived and can significantly impact its values and practices. In light of this fact, all companies would do well to communicate with their stakeholders. A group of stakeholders in a company experiences the direct effects of that company’s performance and decision-making.

Stakeholders vs. Shareholders: An Important Distinction to Make

It also means that stockholders will likely see the value of their stocks go down. Investors will look at this decision and decide to move away from the company because doing business in an unprofitable area makes no sense at all. He might have owned shares in CITGO, but at 11 years old he probably wasn’t a key stakeholder for any major project teams. A shareholder’s income from both dividends and sale of shares is included in their personal tax return.

Importance of Balancing Stakeholder and Shareholder Interests

It can be said that stockholders are always stakeholders in a company, but stakeholders are not always stockholders. A public company is owned by its investors, who hold shares in its stock. Even if a majority shareholder reaps the most reward from profits, every shareholder gets a piece of the pie. There are some organizations that don’t have shareholders, such as a public university, which has many stakeholders.

Should You Focus on Shareholders or Stakeholders?

Shareholders want the company’s executives to carry out activities that have a positive effect on stock prices and the value of dividends distributed to shareholders. Also, shareholders would want the company to focus on expansion, acquisitions, mergers, and other activities that increase the company’s profitability and overall financial health. If the company’s share price increases, the shareholder’s value increases, while if the company performs poorly what are liability accounts and its stock price declines, then the shareholder’s value decreases. Shareholders would prefer the company’s management to take actions that increase the share price and dividends and improve their financial position. Generally, a shareholder is a stakeholder of the company while a stakeholder is not necessarily a shareholder. A shareholder is a person who owns an equity stock in the company, and therefore, holds an ownership stake in the company.

The terms stakeholder and shareholder are sometimes incorrectly used interchangeably. The rights of the shareholders are subordinated (placed under) the rights of bond-holders so that shareholders lose the value of their shares if the corporation becomes bankrupt. Shareholders profit when a company does well and lose money when a company does poorly. Learn more about how this process works, as well as other responsibilities stockholders have. Although advisers are like supporters in some ways, they have more specific role to play. They provide a particular form of resource or support through their advice.