What is a share? Share price. What are company shares and why are they needed? What does a company share mean?

Anyone can buy a piece of Gazprom, Sberbank or another public company. To do this, he needs to buy their shares.

The Law “On the Securities Market” gives the following definition of what a share is:

Promotion- emission security, which secures the rights of its owner (shareholder) to receive part of the profit of the joint-stock company in the form of dividends, to participate in the management of the joint-stock company and to part of the property remaining after its liquidation.

Thus, the investor who bought the share becomes a co-owner of the company. And as one of the owners, he receives the rights to receive part of the profit and to participate in the management of the company, but also bears the risks associated with the activities of the company.

Shares can only be issued by a joint stock company. The authorized capital of such a company is divided into shares - shares (share in English means “share”). One share corresponds to one share of capital. The number of shares an investor owns determines his stake in the company.

Companies issue shares to raise money. By selling their shares, the company receives money for its development, and investors receive a share in the company in accordance with the number of shares purchased. Unlike bonds, the company is not obliged to return this money to investors; it becomes its property. But investors can count on making a profit through dividends and rising stock prices.

Previously, shares were issued on paper and were literally “securities.” Now shares are issued in book-entry form and data on them and their owners is stored electronically.

A share is a perpetual security and is issued for an indefinite period. A share can only cease to exist if the company is liquidated or acquired by another company.

Types of shares

Share capital can consist of two types of shares - ordinary and preferred.

Ordinary shares form the basis of the share capital; by law, the company’s capital cannot be less than 75% ordinary shares. The capital of some companies, for example, Gazprom, consists entirely of ordinary shares. Owners of ordinary shares have the following rights:

• voting rights at the shareholders' meeting
• right to receive dividends
• the right to receive part of the company's property upon its liquidation after payment of all obligations and liquidation value preferred shares

Voting rights are the most important function of common stock. One share - one vote. The more shares of common stock you own, the more influence you will have in deciding issues at the shareholders' meeting. Voting at the meeting is carried out using ballots. Voting ballots are sent by mail, the investor fills them out and sends them back. On many issues, decisions are made by a simple majority of votes - 50% plus one vote. But some issues require a qualified 3/4 majority vote.

By owning a controlling stake (50% + one share), you can make sole decisions on almost all issues. A blocking stake (25% or more) allows for a veto.

Preference shares just like ordinary ones, they form the share capital of the company. Preferred shares have the following advantages:

• priority in payment over ordinary shares upon liquidation of the company - first all creditors receive payments, then the owners of preferred shares, and then only the owners of ordinary shares.
• the amount of dividends is determined and stated in the company's charter in the form of a certain amount sum of money, shares of net profit, as a percentage of the par value of the share, or a calculation method is given.

Dividends are paid only if a corresponding decision has been made at the general meeting of shareholders. Preference shares do not have voting rights, but if dividends have not been paid on them, they become voting shares.

A company issues preferred stock to avoid taking on debt capital without increasing the number of shareholders with voting rights.

The dividend on preferred shares can be fixed, when its size remains unchanged, or variable, the size of which depends on the amount of profit.

The market price of common and preferred shares of the same company may differ from each other. On Russian market the price of preferred shares is often several percent lower than the price of ordinary shares. Some researchers attribute this to a “voting premium.” In those countries where the rights of minority (with a small share of shares) shareholders are often infringed and violated, ordinary shares with voting rights are valued more highly, since they always vote at a meeting of shareholders, and therefore allow them to assert their rights.

Another explanation is that for preferred shares the dividend amount is larger, and for ordinary shares the shortfall in dividend is expressed in an increase in market value.

Share price

The value of shares can be nominal, issue, market, or book value.

It is determined during the creation of the joint-stock company and is stated in the charter. The nominal value is calculated as the sum authorized capital, divided by the number of shares. The par value of shares has no economic meaning and is not related to the market value of the shares, and is only needed to ensure that the founders buy shares at a certain price. The nominal price may differ from the market price by thousands of times.

Issue price of shares— the price at which shares are placed on the market. The issue price cannot be lower than the nominal price. Due to the difference between the nominal and issue price of the share, the company receives share premium.

Market value of shares— share price on the secondary market. This is the price you can see on stock exchange. The market price of shares is formed during trading under the influence of demand, supply and liquidity.

Market value of shares

Based on the market value, the company's capitalization is calculated by multiplying the market price of shares by their number. A company's market capitalization shows its value. Forbes magazine annually compiles a ranking of the world's largest companies, the Global 2000 Leading Companies. The largest company in the world by capitalization in 2014 is Apple.

Book value of shares is the company's net asset value divided by the number of shares. Net assets are the value of all of a company's assets minus all of its liabilities. That is, the book value shows what amount theoretically falls on one share if the company pays off all debts and sells all remaining assets. The book value of shares can be either lower or higher than the market value.

What are stocks, what are they, how do they differ from each other? Everyone knows that shares are securities with the help of which many people receive good income. But for most, the question remains unclear: how can you make money on stocks? Let's look at the basic concepts about stocks.

What are shares

So, promotion is an issue-grade security that gives its owner the following:

• the right to manage a joint stock company (JSC);
• the right to receive part of the JSC’s profit in the form of dividends;
• the right to part of the property remaining after the liquidation of the JSC.

The more shares, the more influence the shareholder has over the organization and the more income he can receive. The shareholder is not responsible for the company's debts; he risks only the money invested in the shares.

In Russia, currently all shares are registered; the transfer from one owner to another must be reflected in the register of owners of securities at the issuer.

Shares are perpetual, that is, the rights of the shareholder are retained as long as the joint stock company that issued them exists.

Types of shareholders

Shareholder- is it legal or individual holding shares.

Sole shareholder– owns 100% of shares.

Majority shareholder (majority shareholder) comes from the French majorité - majority. This is the name given to shareholders with a predominant number of shares. If a shareholder owns 50% of all shares of a company, then he owns a controlling stake.

Minority shareholder (minority shareholder)- this is a person who has a small stake and therefore does not have the right to participate in the management of the joint-stock company.

The division into majority and minority shareholders occurs only among ordinary shares; owners of preferred shares do not have any voting rights.

What are shares? These are the most common securities in the world; if used correctly, they can generate good income.

Happy investment!
Nina Polonskaya

Information and analytical services and materials are provided by Freedom Finance Investment Company LLC as part of the provision of these services and are not an independent type of activity.

The company reserves the right to refuse to provide services to persons who do not meet the conditions imposed on clients or who are subject to prohibitions/restrictions on the provision of such services in accordance with the law. Russian Federation or other countries where operations are carried out. Limitations may also be imposed by internal procedures and control of Freedom Finance Investment Company LLC.

Freedom Finance Investment Company LLC provides financial services on the territory of the Russian Federation in accordance with state perpetual licenses for brokerage, dealer and depository activities, as well as securities management activities. Government regulation activities of the company and protection of the interests of its clients is carried out by central bank Russian Federation. Owning securities and other financial instruments is always associated with risks: the cost of securities and other financial instruments can either rise or fall.

Past investment performance is no guarantee of future returns. In accordance with the law, the company does not guarantee or promise future returns on investments, does not guarantee the reliability of possible investments and the stability of the amount of possible income. Services for transactions with foreign securities are available to persons who are qualified investors in accordance with current legislation and are carried out in accordance with the restrictions established by current legislation.

Company shares– these are securities that indicate that their owner has made a contribution to the capital of the company. The owner of shares has every right to receive profit in the form of dividends. The amount of profit which a shareholder will receive depends on his share in JSC(a joint stock company that can be open or closed).

Company shares are divided into:

• Ordinary
• Privileged

The owner of the first has the right to manage the company and vote during the shareholders meeting. One share usually corresponds to one voice. The owner of ordinary shares is entitled to receive simple dividends.

The owner of preferred shares has a large number of rights. Namely, the right to be the first to make a profit with more high percentage on dividends.

How to start trading shares on the stock exchange?

Russian platforms for trading shares: MICEX(Moscow Interbank Currency Exchange) and RTS (Russian Trading System).

In accordance with the legislation of the Russian Federation, only specialized companies with a license can trade on the stock exchange. The latter is issued by the Federal Financial Markets Service - Federal service on the financial market.

Before you start trading shares on the stock exchange, you need to settle the necessary technical issues. Below is a clear sequence of actions that an experienced trader follows:

1. Search for a reliable brokerage company;
2. Conclusion of an agreement with;
3. Opening an account;
4. Transfer a certain amount of money to the account (as much as you think is necessary);
5. Start trading on .

Factors influencing stock prices

Many factors influence stock prices. But we can simplify the understanding to two fundamental factors that make up the cost:

• The desire to buy or sell shares on the part of other traders;
• Volume of purchases and sales of shares. If there is a majority of buyers, then there is an increase in quotes, but if people prefer to sell shares, we see a decrease in prices.

People will buy shares of a company if they are attracted to the company's earnings, management, and promise. If traders do not see a company's growth prospects, they will certainly get rid of its securities. Also, stock prices depend on the general state of the country's economy and government actions.

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One of the factors influencing profitable investment, is the analysis and knowledge of the principle of operation of securities. For this reason, studying all types of stocks is a must to get maximum profits.

What is a share?

Some investors use specialists to manage their funds. Nevertheless, every investor should at least know what a stock is in simple words.

A share is a security that gives its owner the right to receive income and also take part in the activities of its issuer. It is issued by a joint stock company (JSC), which can be public or non-public. Any enterprise can act as a JSC.

What is a share in economics

The definition of this type of securities in the general economic context is a source of income, which can be either primary or additional.

The company's shares allow its holders to:

1. Make decisions during the work of the organization.
2. Receive a share of the income that the enterprise brings.
3. Claim part of the property in the event of liquidation of the organization.

There are different types of shares, the differentiation of which is influenced by several factors. Basically, these are the profit margins and the powers vested in their owner.

Types and their characteristics

Varieties of shares are represented by several groups, which are united by a common characteristic.

Regular/privileged

There are two types of shares, if we consider them from the point of view of the nature of making a profit.

Regular promotion brings income to its holder as a percentage of the total profit received by the enterprise during the reporting period.

Privileged group also brings profit, however, this is a strictly defined amount. This type of securities allows you to insure yourself in case the enterprise falls on the market, but with high incomes it will not allow you to earn more than usual.

Also, ordinary shares differ from preferred ones in that holders of the latter are deprived of a vote when making any decisions at investor meetings.

Preferred securities cannot exceed ¼ of total assets.

Posted/Announced

Also, shares are different based on their value for the authorized capital. Thus, there are two types of shares that determine the market price of a particular joint stock company.

Posted will talk about the size of this capital, being basic. Announced they are issued after the main ones in order to increase the initial value of the enterprise and expand the financial support.

Treasury/quasi-treasury

Classification of shares by this type basically contains the nature of their release.

Treasury securities were released onto the market and later purchased by the JSC itself. Treasury securities do not have voting rights and are not taken into account when counting votes, distributing profits and dividing property in the event that the issuer ceases its activities. The issuer cannot pledge its own shares, alienate them free of charge or at less than the average market value.

Quasi-treasury are submitted to Common Market, as part of the capital of the subsidiary. For this type of securities, Russian laws do not provide for restrictions, which allows the management of the joint-stock company to have greater control over decision-making in the subsidiary.

Cumulative

This type implies standard ordinary assets that the joint-stock company puts into circulation in case of financial difficulties.

As a subspecies - cumulative preferred securities, give their owner guarantees of profit. Those. these shares belong to the category of those for which, in the absence of income of the joint-stock company for the current period, all dividends will be issued upon the nearest improvement in the financial position of the organization. Typically, no more than three years are allowed for the issuance of profit debt.

Briefcase

These are any of the types of these securities (excluding quasi-treasury securities) included in the total assets of the holder. This means that an investor can own shares of several enterprises, and together they make up an entire portfolio.

Other types

Other types of shares of a joint stock company include:

• gold;
• nominal;
• convertible;
• voters.

Gold give their owners advantages over others, giving them special rights. Typically, their holders are large government agencies or the state itself.

Registered shares (or bearer)– papers whose text contains the name of their owner. Their main difference is that the sale of such securities is impossible, since the joint-stock company is obligated (in terms of profit and other issues) only to the person whose name is on the asset. Moreover, they are divided into two subspecies:

• anonymous;
• catechumens.

The amount of profit does not depend on belonging to any of these subspecies.

Convertible papers have the property of transferring them into assets of the same enterprise (they can also be bonds). The conversion rate is set in advance.

What are company shares and why are they needed?

In short, company shares are documentary evidence that their holder gave a certain amount of funds as a share of the authorized capital. The categories of company shares are similar to the generally recognized ones.

The amount of profit that shares provide directly depends on the number of securities each investor has. In the vast majority of cases, shareholder shares are determined as a percentage (the exception is the preferred type).

Pros and cons of stocks

Like any type of investment, enterprise assets also have their disadvantages and advantages.

Minuses

The main risk of stocks is that it is extremely difficult to predict a fall in their value. This means that today the holder purchases them at the same price, and tomorrow the value of the assets falls sharply, bringing obvious losses.

Another negative feature of such an investment is the need to understand this area. But if the holder of the securities does not know what to do with the shares, then he can hire a specialist (broker) who will take care of all the hassle of trading on the stock market. This circumstance is an additional expense item, which means it reduces the overall profit. But even despite the presence of a broker, the investor must know everything about the shares. Otherwise, he risks becoming a victim of fraudulent activities or incurring financial losses.

pros

The advantages of owning this type of securities are their versatility, i.e. absolutely any person who has a sufficient amount Money, can purchase them.

Ownership of company assets means receiving passive income without further investment. If the activities of the JSC are successful, then the investor simply makes a profit without any additional manipulations on his part.

Investing in shares of an enterprise is the same risky step as any other type of investment. Nevertheless, such expenditure of personal capital is recognized as one of the most profitable if the joint stock company is chosen correctly.