Examples of shareholder in the following topics:
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- To avoid this "phantom income" scenario, S corporations commonly use shareholder agreements that stipulate at least enough distribution must be made for shareholders to pay the taxes on their distributive shares.
- Thus, income is taxed at the shareholder level and not at the corporate level, and payments are distributed to S shareholders tax-free to the extent that the distributed earnings were not previously taxed.
- Spouses are automatically treated as a single shareholder.
- Shareholders must be U.S. citizens or residents and natural persons, so corporate shareholders and partnerships are generally excluded.
- Profits and losses must be allocated to shareholders proportionately to each one's interest in the business.
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- Shareholders of a modern business corporation have limited liability for the corporation's debts and obligations.
- Also if there are other major shareholders in the company, and one of them dies, the business will still continue.
- Unlike a partnership or sole proprietorship, shareholders of a modern business corporation have limited liability for the corporation's debts and obligations.
- This increases the attraction to potential shareholders and increases both the number of willing shareholders and the amount they are likely to invest.
- Another advantage is that the assets and structure of the corporation may continue beyond the lifetimes of its shareholders and bondholders.
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- Shareholders' equity is the difference between total assets and total liabilities.
- In an accounting context, shareholders' equity (or stockholders' equity, shareholders' funds, shareholders' capital or similar terms) represents the remaining interest in assets of a company, spread among individual shareholders of common or preferred stock.
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- In many countries, corporate profits are taxed at a corporate tax rate, and dividends paid to shareholders are taxed at a separate rate -- double taxation.
- This is the concept of double taxation: first the company was taxed for its profits, and later shareholders were taxed for their dividends.
- In many countries, corporate profits are taxed at a corporate tax rate, and dividends paid to shareholders are taxed at a separate rate.
- Instead, the corporation's income or losses are divided among and passed through to its shareholders.
- The shareholders must then report the income or loss on their own individual income tax returns.
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- A C corporation has no limit on the number of shareholders, foreign or domestic.
- S corporations are merely corporations that elect to pass corporate income, losses, deductions, and credit through to their shareholders for federal tax purposes.
- Thus, income is taxed at the shareholder level and not at the corporate level.
- Payments to S shareholders by the corporation are distributed tax-free to the extent that the distributed earnings were not previously taxed.
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- To abide by the bylaws, you might decide to hold shareholder meetings every October 15 (after the fiscal year has ended).
- Bylaws outline a number of important administrative details such as when annual shareholder meetings will be held, who can vote, and the manner in which shareholders will be notified if there is a need for an additional "special" meeting.
- For example, if a shareholder purchased $100 in stock, no more than $100 can be lost.
- A creditor of a shareholder of a corporation or LLC cannot seize the assets of the company.
- Its existence is not affected by the death of shareholders, directors, or officers of the corporation.
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- In a joint-stock company, the members are known as shareholders and their share in the ownership, control, and profits of the corporation is determined by their portion of shares.
- Thus, a person who owns a quarter of the shares of a joint-stock company owns a quarter of the company, is entitled to a quarter of the profit (or at least a quarter of the profit given to shareholders as dividends), and has a quarter of the votes that may be cast at general meetings.
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- Further, corporate fraud puts into question one of the fundamental reasons of why shareholders invest in public companies, the need for transparency.
- Corporate Social Responsibility (CSR) is a concept whereby companies integrate ethical, social, environmental, and other global issues into their business operations and in their interaction with their stakeholders (employees, customers, shareholders, investors, local communities, government), all on a voluntary basis.
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- Companies can use equity financing to raise money and/or increase shareholder liquidity (through an IPO).
- A stock certificate is a legal document that specifies the amount of shares owned by the shareholder, and other specifics of the shares, such as the par value, if any, or the class of the shares.
- Preferred stock differs from common stock in that it typically does not carry voting rights but is legally entitled to receive a certain level of dividend payments before any dividends can be issued to other shareholders.
- In finance, the cost of equity is the return, often expressed as a rate of return, a firm theoretically pays to its equity investors, (i.e., shareholders) to compensate for the risk they undertake by investing their capital.
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- ROE (Return on Equity) = Net Income / Shareholder Equity = 1,057/7,340 = 14.4 percent
- The ROE measures the firm's ability to generate profits from every unit of shareholder equity. 0.144 (or 14 percent) is not a bad figure, but by no means a very good once, since ROE's between 15 to 20 percent are generally considered good.
- This shows the relative proportion of shareholders' equity and debt used to finance a company's assets.