Stakeholder (law)

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The term "stakeholder", as traditionally used in the English language in law and notably gambling, is a third party who temporarily holds money or property while its owner is still being determined.

  • More recently a very different meaning of the term has become widely used in management. In a business context, a "stakeholder" is a person or organization that has a legitimate interest in a project or entity. The new use of the term arose together with and due to the spread of corporate social responsibility ideas, but there are also utilitarian and traditional business goals that are served by the new meaning of the term (see Stakeholder theory and below).

In law[edit]

The role of stakeholder is a concept in law. A stakeholder was originally a person who temporarily holds money or other property while its owner is being determined. This is, for example, the situation when two persons bet on the outcome of a future event and ask a third, disinterested, neutral person to hold the money (or "stake[s]") that they have wagered (or "staked")). After the event occurs, the stakeholder distributes the stakes to one or both of the original (or other) parties according to the outcome of the event and according to the previously decided conditions. Courts sometimes act as stakeholders, holding property while litigation between the possible owners resolves the issue in which one is entitled to the property. Trustees also often act as stakeholders, holding property until beneficiaries come of age, for example. An "escrow agent" is one kind of trustee who is a stakeholder, usually in a situation where part of the purchase price of property is being held until some condition is satisfied. In legal documents, the escrow agent is often referred to as a "mere stakeholder."

See also below[edit]