Shareholders are the individuals or groups that invest in a corporation. Each portion of ownership of a corporation is known as a share of stock. An individual may own one share of stock or several shares. Shareholders have certain rights when it comes to the corporation. The most important one is the right to vote, for example, to elect the corporation’s board of directors or change the corporation’s bylaws. Shareholders vote on a limited number of corporate issues, but they nevertheless have the right to exert some control over the corporation’s dealings. Shareholder voting typically takes place at an annual meeting, which state law usually require of corporations. Corporations or shareholders may also request special meetings when a shareholder voting issue arises. It is not always practical for shareholders, who may live in various parts of the country or the world, to attend corporate shareholder meetings. For this reason, states permit shareholders to vote by authorizing, in writing, another person to vote on behalf of the shareholder. This manner of voting is known as proxy.
Shareholders also have the right to investigate the corporation’s books. So long as the shareholder seeking to investigate the corporation’s records is doing so for a proper purpose or a purpose that reasonably relates to the shareholder’s financial interests, the corporation must allow the inspection. In some cases, a corporation may require that the shareholder hold a minimum number of shares or that the shares be held for a certain period of time before allowing a shareholder to inspect the corporation’s books and records.