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Shareholders and stakeholders in your cap table

by Costi Milchi • June 22, 2023 • 8 minute read

There is some confusion between the terms “shareholder” and “stakeholder” in a company. What do we mean by one or another, what are the differences and why should you care about them? Here is what you should know.

What exactly are shareholders and stakeholders, and what’s the difference?

A stakeholder is any individual or group that has an interest or is affected by the activities, decisions, or outcomes of your company. Stakeholders can include employees, customers, suppliers, communities, government entities, trade unions, advocacy groups, and whoever knows or is interested or influenced by your company. They can have various perspectives and concerns related to the organization, such as its social and environmental impact, reputation, sustainability, and overall success.

A shareholder, on the other hand, refers to an individual, group, or institution that owns shares or stock in your company – we also call them equity owners. Shareholders are primarily concerned with their investment, which means that they will care about profitability, value, cash. Shareholders are often interested in maximizing their returns on investment through dividends, increase in the value of the company, or other financial benefits.

What should be very clear is that shareholders are specific stakeholders with a financial interest in a company.  

Who is more influent in the company?

Shareholders generally have voting rights in the company, so they participate in decisions related to major corporate matters, such as the appointment of directors or changes in the company's structure. Their influence is typically proportional to their shareholding, meaning those with more shares have a greater say in the decision-making process. Because of their main interests, their main influence could be felt in the company's financial performance, governance practices, and long-term strategy.

Stakeholders have a broader scope of interest beyond just financial gain. They may be concerned about factors like ethical practices, environmental impact, social responsibility, employee well-being, or community development. Even if they don't have direct voting rights, stakeholders often contribute to shaping the organization's policies, direction, and decision-making by providing feedback, expressing concerns, or advocating for specific causes.

You could say that shareholders have a direct influence on the company business, while stakeholders have an indirect one. However, many times indirect influences are materialized in important decisions of the shareholders.

Which are the main objectives and interests of shareholders and stakeholders in a company?

Let’s compare the two categories:



It's important to note that there can be overlaps between the interests of shareholders and stakeholders, but also situations in which the interests of the two categories are different, even conflicting. While shareholders usually are interested in the growth and development of your company, some stakeholders may be opposed to it, and even take adverse actions.

Could you give me some examples of shareholders for a company?

The main characteristic of shareholders, or partners, associates and such, as you will see at the end of this article, is that they own equity in the company.

Which would be some examples of stakeholders for a company?

These are just a few examples, and the specific stakeholders vary tremendously depending on the industry, location, and nature of the company's operations.

Is it correct to designate as shareholders stock owners in a LLC type of company?

Shareholder means basically “holder of shares”. But not all types of companies have their equity composed of shares, so … what do we call the company owners in other entities, for example the ones called LLCs in Europe (Limited Liability Companies)? And how do you call them in English? Well … it depends.

While the term "shareholder" is commonly used in English-speaking countries to refer to individuals who own shares in a company, the legal terminology and usage can differ in various jurisdictions. Let’s explore the situation in some of Europe’s countries and regions.

Equity owners are referred to as "μέτοχοι" (metochi), which typically translates to "shareholders" in English.

Equity owners in a GmbH are referred to as "Gesellschafter," which translates to "partners" or "shareholders" in English, depending on the context. Therefore, "Gesellschafter," "partners," or "shareholders" are all appropriate terms to refer to equity owners in a GmbH in the DACH region.

Well, we hope you have now a clear idea about the differences between stakeholders, who are in general all people and entities influenced or interested in what you do in the company, and shareholders (or their equivalent), who are a specific subset of stakeholders, the ones who own the equity of the company. The stakeholders who own options or financial instruments as convertible notes which give them the right to become in certain circumstances equity owners will appear in the cap table of the company, so that the equity structure of the company will become clear, including not only actual, but also future and potential equity owners.

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