Companies, when wanting to expand or grow in a business, need to raise funds from the market by way of issue of shares or by issue of debentures (i.e loans). So people being issued shares are known as shareholders and the ones issued debentures are known as the debenture holders.

These decisions are taken by the promoter of the company.

Thus, shares are the company’s securities that are held by the people. These people who have purchased the shares or have subscribed to the shares are known as the shareholders.

These types of shareholders become part owners of the companies with the percentage of shares they hold.