What is a Majority Shareholder?

A majority shareholder is an individual or entity that owns more than 50% of the shares in a company. In United States business law, majority shareholders have a significant level of control over the company and have the authority to make decisions about its management and operations. In most cases, the majority shareholder is the founder or CEO of the company. In long-established family businesses, the majority shareholder may be a descendent of the company’s founder. It is more common for private companies to have majority shareholders than public companies. 

Key Takeaways

• A majority shareholder is an individual or entity that owns more than half of a company’s shares.
• Majority shareholders with voting shares have significant influence over the direction of a company.
• While majority shareholders do not necessarily own the actual corporation, they are considered stakeholders since they have contributed a substantial financial investment.

More on Majority Shareholders

Majority shareholders, owning more than half of the voting interest in a company, play a crucial role in managing the business operations due to their significant level of control. They are able to appoint directors and other key personnel as well as make important decisions about business matters such as investments, mergers and acquisitions, and financing. Depending on the bylaws of the company, majority shareholders may be able to make these decisions unilaterally. However, some corporations require the majority shareholder to consult with or seek approval from additional shareholders. 

If you have any questions about majority shareholder rights and privileges, it’s best to contact an experienced business attorney. It is necessary to check the specific bylaws of a corporation, as the rights of majority shareholders may vary among different companies.

Majority Shareholders and Acquisitions

The majority shareholder(s) of a company play an essential role in the acquisition process. A buyout occurs when one company, known as the acquiring company, purchases the controlling stake in another company, referred to as the target company. In other words, the acquiring company must purchase over 50% of a target company’s outstanding share, or have the votes of at least 50% of the current shareholders. In certain jurisdictions, supermajority may be required for a buyout to take place. A supermajority is an amendment to a company’s corporate charter that requires a large majority or shareholders, typically 70 to 90 percent, to approve important changes in a corporation.

Bottom Line

As a majority shareholder in a company, it is necessary to be aware of your legal rights and privileges. However, since the field of business and corporate law can be quite complicated, you might find it difficult to keep up with the relevant laws and regulations in your states. Fortunately, our experienced attorneys are here to help you navigate the complex legal issues involved in operating a corporation. Whether you are a minority shareholder trying to assert your rights or a company owner trying to negotiate with majority shareholders, our attorneys have the knowledge and expertise to support you.