Principal Shareholder

DEFINITION of 'Principal Shareholder'

The main owner of a publicly traded investment, also known as the majority shareholder. The principal shareholder is the entity that owns the greatest percentage of a company's shares and therefore has the largest stake in the company's success. Smaller investors often look to the behavior of the principal shareholder as an indication of the company's performance. If the principal shareholder makes a large additional investment in the company, for example, this is probably an indication that the company is performing well.

BREAKING DOWN 'Principal Shareholder'

In some cases, the company's principal shareholder is also its CEO, president or founder. This is common due to the fact that often the individual or family which founded the company typically insists on maintaining majority control over the company's shares, allowing them, the primary shareholders to dictate to a large degree the direction of the business.

RELATED TERMS
  1. Shareholders' Agreement

    An arrangement among a company's shareholders describing how ...
  2. Majority Shareholder

    A person or entity that owns more than 50% of a company's outstanding ...
  3. Agency Costs

    A type of internal cost that arises from, or must be paid to, ...
  4. Shareholder Services Agent

    A financial institution or similar entity responsible for looking ...
  5. Shareholder Activist

    A person who attempts to use his or her rights as a shareholder ...
  6. Shareholder Register

    A list of active owners of a company's shares, updated on an ...
Related Articles
  1. Investing Basics

    Who is a Shareholder?

    A shareholder is a person, company or other entity that owns at least one share of a company’s stock.
  2. Term

    What is the Shareholder Equity Ratio?

    The shareholder equity ratio shows how much money shareholders will receive if a company has to liquidate its assets.
  3. Investing Basics

    Knowing Your Rights As A Shareholder

    We delve into common stock owners' privileges and how to be vigilant in monitoring a company.
  4. Economics

    What Does Principal Mean?

    For banks, principal refers to the amount due on a loan, and is used to calculate interest payments.
  5. Active Trading

    Wrath of the Shareholders

    We all know that publicly traded companies are enthralled by their stocks, but why? Here we take a look at the top 5 reasons why companies care so much about their stock prices.
  6. Investing Basics

    Knowing Your Rights As A Shareholder

    Common shareholders typically enjoy six main rights.
  7. Investing Basics

    Why Do Companies Care About Their Stock Prices?

    Read on to learn more about the nature of stocks and the true meaning of ownership.
  8. Investing Basics

    Stocks Basics: What Are Stocks?

    The Definition of a Stock Plain and simple, stock is a share in the ownership of a company. Stock represents a claim on the company's assets and earnings. As you acquire more stock, your ownership ...
  9. Investing Basics

    Explaining Rights Offering

    A rights offering is an offer by a company to its existing shareholders of the right to buy additional shares in proportion to the number they already own.
  10. Investing News

    Principal Global Investors: Investment Manager Highlight (PFG)

    Learn about the investment operations of Principal Global Investors, the Principal Financial subsidiary with more than $360 billion in assets under management.
RELATED FAQS
  1. What are the responsibilities of the principal in a company?

    Learn to differentiate between some of the many definitions and responsibilities of a "principal" as it relates to business ... Read Answer >>
  2. What rights do all common shareholders have?

    Learn what rights all common shareholders have, and understand the remedies that can be taken if those rights are violated ... Read Answer >>
  3. What are some characteristics of ordinary shares?

    Read about some of the primary characteristics of ordinary shares, also known as common shares, including voting rights and ... Read Answer >>
  4. What does it signify about the state of a company if it has unusually high shareholders' ...

    Understand the meaning and calculation of shareholder equity and what a high level of shareholder equity signifies about ... Read Answer >>
  5. What is the investor rights movement?

    The investor rights movement, also called shareholder activism, refers to the efforts of shareholders of publicly traded ... Read Answer >>
  6. What happens to the stock of a public company that goes bankrupt?

    Occasionally, publicly listed companies go bankrupt. The company's shareholders, depending on the type of stock they hold, ... Read Answer >>
Hot Definitions
  1. Law Of Demand

    A microeconomic law that states that, all other factors being equal, as the price of a good or service increases, consumer ...
  2. Cost Of Debt

    The effective rate that a company pays on its current debt. This can be measured in either before- or after-tax returns; ...
  3. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  4. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  5. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  6. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
Trading Center