Inspired by this question, I wondered what the implications of owning the majority (> 50%) of a company's stocks are.
Will I own said company? Will I be able to call the shots? What if someone was just simply rich to buy > 50%, but does not know how to handle the company?
You'll own whatever fraction you bought. To own the company (as in, boolean - yes or no) you need to buy 100% of the outstanding stock.
RE controlling the company, in general the answer is yes - although the mechanism for this might not be so straight forward (ie. you may have to appoint board members and may only be able to do so at pre-set intervals) and there may be conditions in the company charter designed to stop this happening. Depending on your jurisdiction certain ownership percentages can also trigger the need to do certain things so you may not be able to just buy 50% - in Australia when you reach 20% ownership you have to launch a formal takeover bid.
Owning more than 50% of a company's stock normally gives you the right to elect a majority, or even all of a company's (board of) directors. Once you have your directors in place, you can tell them who to hire and fire among managers.
There are some things that may stand in the way of your doing this. First, there may be a company bylaw that says that the directors can be replaced only one "class" at a time, with three or four "classes." Then it could take you two or three years to get control of the company. Second, there may be different classes of shares with different voting rights, so if e.g. "A" shares controlled by the founding family gives them ten votes, and "B" shares owned by the other shareholders, you may have a majority of total shares and be outvoted by the "A" shares.
I believe Tom Au answered your key question.
Let me just add in response to, "What if someone was just simply rich to buy > 50%, but does not know how to handle the company?"
This happens all the time. Bob Senior is a brilliant business man, he starts a company, it is wildly successful, then he dies and Bob Junior inherits the company. (If it's a privately owned company he may inherit it directly; if it's a corporation he inherits a controlling interest in the stock.) Bob Junior knows nothing about how to run a business. And so he mismanages the company, runs it into the ground, and eventually it goes bankrupt. Stock holders lose their investment, employees lose their jobs, and in general everyone is very unhappy.
I suppose it also happens that someone gets rich doing thing A and then decides that he's going to buy a business that does thing B. He has no idea how to run a business doing thing B and he destroys the company. I can't think of any specific examples of this off the top of my head, but I've heard of it happening with people who make a ton of money as actors or professional athletes and then decide to start a business.
The usual pattern is that shareholders don't run companies in a practical sense, so "if someone was just simply rich to buy > 50%, but does not know how to handle the company" doesn't change anything.
In large companies, the involvement of shareholders is limited to a few votes on key issues such as allocating profit (how much to keep in company vs pay in dividends) and choosing board members. And board members also don't run the company - they oversee how the company is being run, and choose executives who will actually run the company.
If a rich person simply buys 50% and doesn't desire to get personally involved, then they just vote for whatever board members seem apropriate and forget about it.
I almost agree. I am not completely sure about the ownership of stock, but to have the majority ownership of any company you must own more than 50% of a company's outstanding shares. Although a board in majority, could out vote a majority shareholder in most cases depending on the company policy regarding shareholders and the general law of the country, and to how the company is managed.
The person holding the majority of shares can influence the decisions of the company.
Even though the shareholder holds majority of the shares,the Board of Directors appointed by the shareholders in the Annual General Meeting will run the company.
As said in the characteristics of the company,the owners and the administrators of the company are different.
The shareholder holding majority of the shares can influence the business decisions like appointing the auditor,director etc. and any other business decisions(not taken in the ordinary business) that are taken in the Annual General Meeting.
It is also worth noting that one of the character defining features of a publicly traded company is that the management that is responsible for the day to day operations of the stands independent of those who have ownership.
Shareholder of a public company typically don't have influence over the day to day running of the company.
You guys seem to have forgotten the most important part of this equation ... i work for a bank and I can tell u this as a painful fact ... every business is governed by its paperwork ... articles bylaws operating agreements amendments and minutes .. if a companys paperwork says that the 51% owner can fire everyone and move to Alaska and that paperwork is proper (signed and binding) it is with minimal excavation law... case in point every company is different .. and it is formed and governed by its paperwork.
