Who is considered a shareholder?

A shareholder is defined as someone who invests in a company in exchange for equity, which means they purchase shares of that company’s stock. By doing so, they gain ownership in the company and are entitled to a portion of the profits, typically in the form of dividends, as well as voting rights on certain company matters. This ownership stake aligns with the fundamental purpose of investing in equity—becoming a part-owner of the business and sharing in its financial success.

In contrast, individuals who invest for debt securities (like bonds) do not become owners of the company; instead, they become creditors and are entitled to interest payments. Customers with bank accounts have no investment stake or ownership in any company, and entrepreneurs starting new businesses often do so to create ownership in a new venture rather than to acquire it through shares. Thus, the essence of being a shareholder is specifically tied to equity investment in a company.