Stakeholders Vs. Shareholders: What's The Difference?

A shareholder is a person who invested some capital out of his/her finance stock in the concerned business. On the other hand, a stakeholder is a person who deals with an enterprise.

In this case, a stakeholder can be an employee, a customer, or a supplier. This means when a company is affected directly or indirectly by an interested party. The field of stakeholders is wider than shareholders. Stakeholder represents the whole micro-environment of a business.

While shareholders can be an owner or a co-founder. In contrast, stakeholders can’t be an owner but they are the members who deal with the company. In this article, we are going to discuss some of the major differences between shareholders and stakeholders.

What Is A Shareholder?

Every company needs to raise capital to run a business. In this case, they issued shares to the general public. The shareholder is a person who buys the share of the company or else buys from the primary or secondary market.

After that, he/she gets legal ownership of that particular company. One can own the share of any private or public company. Then a share certificate has been given to every individual shareholder for the number of shares they have purchased.

In a company there are two types of shareholders, one is an equity shareholder and another preference shareholder.

Equity Shareholder

Equity Shareholders means the holders of the normal shares of the company. An equity shareholder has the right to vote in the Annual general meeting which is known as AGM. Additionally, when a liquidation occurs of a company they are repaid.

Preference Shareholders

This type of shareholder is the one who needs to pay at a fixed rate as per the payment of dividends. Not only that but those shareholders have to repay the capital in the event of the closing of the company.

What Is A Stakeholder?

A stakeholder is a party who can influence the organization. Apart from that, they can be encouraged by business activities. They are an attentive party who can help the organizations to exist. In the absence of stakeholders, it is difficult to survive a company in the long term.

As per the former governance model, the management of the company is only accountable to the shareholders. But nowadays it is totally different because many corporations have their opinion that is separate from the shareholders.

Not only this but many other constituents exist in the business atmosphere and the management is responsible to answer them. As the business runs in an environment and there are many matters which affect it.

There are two types of stakeholders. One is an Internal Stakeholder and another is an external stakeholder. Under internal stakeholders, there are owners, employees, managers, and so on. On the other hand, external stakeholders are suppliers, customers, society, and many other related factors of a business.

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The Differences Between Stakeholders And Shareholders

Almost a few of us use the term “stakeholders” rather than “shareholder”. In this case, there are various differences between these two factors. Below we have mentioned some of the stakeholders vs shareholder differences.

The shareholders have different priorities than stakeholders. A shareholder is interested in the financial department of a company.

In this case they want to get the best ROI usually in the form of stock appreciation or dividends. This means their foremost priority is basically to boost the overall revenue and stock value of a company. Shareholders are also responsible to handle the company’s debts because it gives them extra financial incentives.

Alternatively, stakeholders are focused on their work more than the finance of a company. Internal stakeholders want to get success from their project so that the entire company can grow. Additionally, they want to operate the business well and also they want to be advanced in their role.

An external stakeholder wants to get benefits from your business project. That means they are basically interested in receiving a great product, services. Apart from that, they want to participate in a respectful mutual partnership.
A shareholder is a part of the ownership of a company. They usually focus on short-term business goals. They don’t prefer any long-term business achievement.

The long-term success of your business is not always a top priority factor for the shareholders. This means if they want they can easily buy another share of a company or they can sell their stock to another party. So in this case shareholders are basically preferred short-term success.

Alternatively, the stakeholders are more interested in long-term goals of your company. They usually don’t focus on short-term financial performance and fluctuations of the stock prices. Instead of that stakeholders want your business to do better performance.
Shareholders are the owners or a co-founder of a company. They usually buy the financial shares which are issued by the company. On the other hand, stakeholders are the concerned parties who want to get effect or affect the company’s goals and policies.
Shareholders are the subpart of the stakeholders. It can be said that shareholders are the stakeholders. Alternatively, stakeholders can’t be a shareholder of the business.
Shareholders give special attention to the ROI of a business. Which means after investing the capital they are looking for return money. But Stakeholders focus on the business performance, services, profitability, and even liquidity of a business.
A company’s shareholders don’t have much scope. On the other hand, stakeholders are basically the constituent of the company.
Shareholder of a company means the limited buying portion of a company. Although stakeholders are the necessary factors which means every organization has a large sector of stakeholders.

Last Words

The above-mentioned factors are necessary for you if you want to run a business. Hence you may be confused about shareholder and stakeholder because both the terms have been used as an alternative.

To get away from this confusion it is good to remember that a shareholder can’t be a stakeholder but a stakeholder can be a shareholder. One more thing is that a company must not have a shareholder but they must have stakeholders.

We hope you found this article helpful. In case you have queries you can comment down below.

Author Bio:
Doron is a passionate blogger. He loves to share her thoughts, ideas, and experiences with the world through blogging. Doron is associated with Techmagnews, Techrab, Worldtech24