Investing for Beginners , investing

A share is a unit of firm’s ownership, which represents the rights and obligations of the shareholder (owner of the shares). If investor owns all shares of the company he is a complete owner, but if he owns only a part of the shares then not the entire company belongs to him. For example, if company has issued totally 1000 shares, and one investor owns a 100 of them, then 10% of the company belongs to him. The most valuable is controlling stake, which usually is 50% plus one share (sometimes lower if shareholding structure allows it).

If there are no share of different classes issued then each share of the company pays the same dividend (if shareholders agrees on dividends payout) and every share represents a vote in shareholders meeting, those are main attributes of the share – to get a part of the company’s profit and take a part in management.

Some time ago shares was represented by material certificates (paper document) but in these day almost all shares are accounted on electronic depositories. 

There are two types of shares: common shares and preferred shares.

Read more about investing in stocks.