Question about partial corporate buyouts.

I think I am using the correct terminology.

I was reading the Wiki page on Carl Icahn last night and learned he owns 12% of this company, 8% of this, 32% of that.

My question is, how does this work in a day to day sense.

Is Carl on the hook for 32% of expenses and receives 32% of revenue?

Or is it pretty much hands off and he just collects dividends on the shares.

The latter.

It would depend on the structure of each company, and on the laws governing both the owner and the country/state where the business is conducted.

Big, publicly traded companies are almost always C Corporation (or a foreign equivalent), where profit and loss is determined at the corporate level and the corporation pays the tax on that. The shareholder only pays taxes on dividends. (Or, possibly, other direct payments like wages or interest, if applicable.)

There’s an exception to every rule, though. Publicly traded partnerships, for example. These issue a K-1 to each unitholder, reporting that person’s share of income and expense. The unitholder is the one to pay taxes, claim credits, etc. based on their share of the earnings. PTPs are a PITA.

In the US, we also have S Corporations that also pass income through to the owners. These have restrictions on the number of shareholders and types of stock, so I don’t think any publicly traded company is an S Corporation… but it would be pretty common for a privately held company. Private companies are not always small. For example, until it’s IPO, Facebook was still a privately held company.

Well, Icahn may collect dividends on his holdings, but it’s not what he’s doing it for. Icahn is a “corporate raider” or “activist shareholder”. He accumulates large stakes in a company in order to put pressure on the management or board, forcing them to do what he, and other large stakeholders he’s lined up on his side, want them to. For instance, he recently bought enough of Family Dollar to force them to accept a takeover bid. They were bought by Dollar Tree, and he made 25% on his shares.