What is a major shareholder?


How long have you been in the stock market? webgiaidap.com I’m sure that whether you are a seasoned investor or a newbie just joined, you will hear mention of large shareholders and small shareholders a few times.

But who are they? Why is their identity important to find out?

It is important to know the major and minor shareholders well as this ensures that you invest in the right direction. Why is that so? Because if you don’t know the organizational structure, what happens to your stocks with the “kingdom” battle?

Many of you are concerned about the issue of shareholders of the company you are investing in. Today webgiaidap.com would like to share through this article to help you better understand what a large and small shareholder is in a business. Follow in my footsteps.

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To answer what a large and small shareholder is, we will need to understand what the concept of a shareholder is

I. Who are shareholders actually?

Shareholders are individuals or organizations that hold legal ownership of a part or all of the contributed capital. In simple terms, they are the owners of shares of the business.

Through many ways that an individual and organization can step one foot into a joint stock company. Buy shares that enterprises offer for sale on the market or contribute capital directly at the time of company establishment.

It is important to distinguish clearly that shareholders are not creditors of the business. This is a very confusing concept. The concept of creditor arises only when you hold the bond of the issuing company. Shareholders will have rights and obligations associated with the activities of the business.

Obligation to jointly implement strategies and policies to plan development steps of the organization. Along with the obligations are the rights and profits gained or the right to vote, vote …. contribute to the development of the company.

Currently, shareholders are divided into the following 4 forms:

The first one that can be mentioned is Founding partner. These are the people who contributed capital in the early stages of establishing the company. According to the Enterprise Law, a joint stock company established must have at least 3 founding shareholders.

They are seen as the founders, laying the foundation for the start of the business. From there, they will call for more friends or partners to expand and increase their financial potential

Special shareholder Holds only a small number of shares, but has the right to veto some important decisions. Usually the special shareholder will be the state. Enterprises whose shares are held by the state will be subject to state control over the activities of enterprises

Preferred shareholders shareholders who have a certain right. It may be the right to receive a certain percentage of dividends before the profits are distributed to other investors or to receive the value of the shares back when required.

However, at the same time, they will be limited to certain rights such as: the right to stand for election to the company’s administration or the right to vote, etc.

And finally common shareholders. Other investors who are not in the above three cases will be called ordinary shareholders.

When you hold even 1 share of a company, you are considered a shareholder of the company

And if calculated according to the percentage of shares that each investor holds, we will have the concept of small shareholders and large shareholders.

II. So what is a Major Shareholder? What rights do major shareholders have?

Major shareholder is a shareholder who directly or indirectly owns 5% of the voting shares of the issuer.

Large shareholders are generally understood to have more power. But essentially the benefits are the same per share. Just a major shareholder who owns more shares and has more interest in the process of voting on a certain decision. Since they get more votes, the probability is higher.

Depending on the holding rate 75%, 51%, 36%, 10%, 5%… that has its own benefits.

For example:

The group or shareholder who owns 75% of the shares will hold control of the company and pass all decisions of the company. However, 2 common and well-known numbers when holding shares are 51% and 36%. When holding 51%, you can propose a lot of decisions and 36% have the right to veto important decisions

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The stock code GAS is held by Vietnam Oil and Gas Group (100% state capital) to 95.76%. So all decisions of GAS are decided and governed by the state!

Currently, the trend of calling for large shareholders is increasingly prevalent. Inviting large shareholders to help businesses increase their financial potential. At the same time, creating sustainable competitive advantage in the competitive era is the current inevitable trend.

Recently, SK Group has decided to pour 23,300 billion VND (equivalent to 1 billion USD) into Vingroup. And it was at this event that SK Group became a major shareholder in Vingroup.

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SK Group is known as one of the largest trading groups in Korea. This giant is currently landing at 4th place in the top 10 in Korea. This transaction has helped Vingroup to carry out nearly 62% of the private share offering through the 2019 annual meeting.

And in June 2019, Viet Capital Securities (VCSC) became a major shareholder of Saigon Thuong Tin Real Estate (TTC Land). By buying back 18 million shares of TTC Land worth 150 billion VND. With the amount of shares held, VCSC has 5.3% shares of the company.

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III. Small shareholders – who are they?

These are shareholders who hold less than 5% of the company’s shares. Usually individual investors.

These shareholders are often more inferior. Because of holding a small amount of shares, business owners are also somewhat unrepentant.

Because they think small shareholders invest mainly because they want personal profits. The activities of the business are also not interested in the slightest. It’s okay to have a profit, but once there is a loss, there will be a dispute.

And gradually businesses are also indifferent to small shareholders. There have been many cases of businesses being brought to court because small shareholders felt oppressed and disrespected.

An illustration of the share ratio of Vinamilk Dairy Joint Stock Company. The king in the dairy business village of Vietnam.

See also: What is Tourniquet – Meaning of the word Tourniquet

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Currently, the total shares held by major shareholders in Vinamilk is 1,160,467,659, equivalent to 66.63% of the company’s current shares. And 580,943,924 the number of shares owned by small shareholders.

IV. 2 opposite sides between shareholders

How do small & large shareholders affect the stock?

The company’s shares at first glance merely reflect the business activities of the company in the marketplace. Transactions or mergers will all affect the par value of shares more or less. But existing in it is a reflection of internal activities between large and small shareholders or both shareholders and the management board of the business.

An organization that is considered to have potential for growth must ensure that it is “warm inside and out”. The stock increased steadily but internally there was frequent turmoil. As a result, sooner or later, this business will also fly out of the market without wings.

The following cases can be considered:

Who is the battle between large and small shareholders?

Big fish and small fish to survive in a blue ocean, fights happen as usual. Big fish eat small fish or small fish scheming, cunningly teaming up to trick the big fish into the trap.

The natural environment is like that, the business market is no less competitive. Large shareholders with strong financial potential of course “weight” voice is also proportional. Many large shareholders rely on their power to suppress the interests of small shareholders.

Or small shareholders for the sake of little profits that link up, inciting a coup. But if the profits are steady, they don’t care at all about the operation of the business. Because they are “small”, they have no influence, so they are also indifferent to the business.

After all, the main purpose of both is investment for profit. But they are not aware of the actions that they greatly affect the operation of the business. Dragging the stock’s par value down catastrophically while being able to join forces to help the business grow more and more.

Therefore, investors need to carefully consider the organizational structure of shareholders before deciding to place orders for certain businesses.

Discrimination also affects stock prices in the market

In 2011, before hearing the news that DVD declared bankruptcy while the stock price was still increasing steadily. This is because large shareholders and businesses collude, cover up and hide the truth.

Of course, they escaped before the rampage went viral. Leaving retail shareholders to face the crisis. Rushed to place a sell order, but few escaped in time. Only 4,170 shares were collected while nearly 2 million shares were put up for sale.

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From the sharing of Mr. Huy (a shareholder of DVD at that time): “I didn’t know anything from DVD, only when HOSE announced that DVD had opened bankruptcy proceedings, every day it tried to sell but couldn’t match orders. To this day, his 200 million dong is just a bunch of white paper not worth a penny. DVD selling assets may not be enough to pay creditors, let alone shareholders

It is not uncommon for large shareholders and businesses to collude to bypass small shareholders in a stock market of this size.

For example, holding the General Meeting of Shareholders, the venue is far away or cumbersome procedures to verify the identity of small shareholders. Without influence, it was difficult to pass the pass, gradually the presence of small shareholders also became sparse.

Or the relationship between shareholders and businesses?

There is also a case where this question is asked: “Do major shareholders really have power? ”

Those are businesses that have State capital accounts for a high proportion. Whether or not major shareholders are important is not important because with the state capital ratio, they are enough to operate the business. But this is really short-sighted. Because enough, but not enough to continue to develop the potential of the business.

And with that “enough” capital, they are just sluggish day by day. And then one day the State divested, major shareholders were not eager to stay. At this point, the sky can’t save it.

That is the reason why many businesses owning high par value of shares, when the state divests capital, it is so bad.

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In 2018, a conflict broke out between the major shareholder Kusto Group and Coteccons Construction Joint Stock Company. Specifically, Coteccons intends to conduct a stock swap to own 100% of Ricons shares

According to Mr. Nguyen Ba Duong – Chairman of Coteccons shared: If merged, we will have 3 companies in the top 5 largest construction companies in Vietnam.

This seemingly beautiful dream was opposed by the large public Kusto Group. Kusto Group said that this M&A deal does not have a clear strategy, does not guarantee that the business will perform well after using shares to pay for this merger.

At present, this deal will not know where to go, but one fact is clear: the relationship between Kusto and Coteccons will be affected more or less. The worst outcome if no consensus is reached from both sides, then there is a high probability that everyone will go their separate ways.

Through this article, webgiaidap.com believes that you have a clear understanding of what are large and small shareholders as well as their effects on the par value of shares.

For a long time, large and small shareholders have always been a double-edged sword that exists in every business. The good or bad performance of a business depends greatly on the impact of shareholders.

As an investor, understanding the business is important. But besides that, understanding the operating structure of each business is also necessary. This will help you ensure your interests as well as capture current investment trends.

See also: 3+ How to Fix This Copy Of Windows Is Not Genuine Error On Windows 7

Things to pay attention to for individual investors

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When you invest in stocks, from the perspective of individual investors, 99.99% are small investors; so you need:

Avoid companies where large shareholders, dishonest management, when taking their own interests to enrich themselves and damage our pockets. Avoid internal companies that stir up chaos. Avoid companies that initially leaders hold too large a proportion of shares, nepotism. Avoid companies with management holding too few shares, when business results are less dependent on the results they receive, so they are easy to do. bad luck, not trying or for personal gain.Major shareholders hold >= 5% of sharesSmall shareholders hold =

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