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Share
A portion of a company bought by a transfer of cash in exchange for
a certificate, the certificate constituting proof of share ownership.
Persons owning shares in a company are called "shareholders".
There are two basic kinds of shares: common and preferred. A shareholder
is not liable for the debts or other obligations of the company except
to the extent of any commitment made to buy shares. The two other benefits
of shares include a right to participate in profits (through dividends)
and the right to share the residue of assets of the company, once liabilities
have been paid off, if it is ever dissolved.
Shareholder
agreement
A contract between the shareholders of the company and the company itself,
in which certain things, usually the purview of the board of directors,
are detailed. For example, a shareholder might be allowed to manage
the company, instead of a board of directors. The shareholder agreement
will also, typically, control inflows to the company (purchase of shares),
how profits are to be distributed, dispute resolution and what to do
if a shareholder dies.
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