Difference
between Director and shareholder
The share holder and
director are different roles in the organization; share holder make investment
in business and the director run the business. In simple term share holder are
owner of the business and director are agent of the equity holder and act on
behalf of equity holder.
1. Types of remuneration
Director is paid salary for
their service, while equity holder receives dividend. Salary is a regular
remuneration irrespective of financial performance of the entity, while
dividend payment depends on the profitability of the entity.
2. Responsibility of Management
Director is responsible for management of the business
and all day to day management is responsibility of the director, while equity
holder are limited decision making role in the organization.
3. Appointment vs. ownership
Director is appointed by the equity holder, while
equity holder enjoys the ownership due to the share holding. In simple term the
share holder is owner and director act as his agent.
4. Term of office
Directors are appointed
for specified term i.e. 3 or 5 years, and upon completion of that term director
office is vacated. Director may be re elected or appointed, while share holder
continues to exit until the share is disposed of by the share holder.
5. Objectivity
Director are more interest
in short term boost of profit because it will result in high remuneration and
bonuses , while equity holder are more interested in stability and long term profitability.
