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.

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