Shareholders
Holders of equity claims on a corporation — entitled to vote, receive declared dividends, and claim residual assets in liquidation.
The exam loves the liquidation waterfall: common shareholders are paid last, behind secured creditors, then priority unsecured claims (taxes and certain employee wages), then general unsecured creditors and preferred holders — so common equity is the residual claim, with theoretically unlimited upside but loss capped at the investment (limited liability). A favorite vignette tests cumulative versus straight (statutory) voting: cumulative lets a minority holder concentrate all votes on one director, improving minority board representation, while straight voting lets a bare majority elect the entire board. Watch for proxy voting (authorizing another to vote for you) and the ordinary versus special resolution split — the latter, e.g. a charter amendment or merger, typically needs a supermajority.
The classic trap is conflating shareholders with stakeholders — every shareholder is a stakeholder, but creditors, employees, and regulators are stakeholders without an equity claim or a vote. Don’t confuse shareholder rights (the entitlements) with governance (the system enforcing them). Hook: shareholders are the owners who eat last but keep whatever’s left over.
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