What Are Shares? Shares are units of equity ownership interest in a corporation that exist as a financial asset providing for an equal distribution in any residual profits, if any are declared, in the form of dividends. Shareholders may also enjoy capital gains if the value of the company rises.
Those who own stocks in a public company may be referred to as stockholders, stakeholders, and shareholders, and in reality, all three terms are correct. Stakes. If you own stock in a given company, your stake represents the percentage of its stock that you own.
A dividend is a share of profits and retained earnings. … When a company generates a profit and accumulates retained earnings, those earnings can be either reinvested in the business or paid out to shareholders as a dividend. The annual dividend per share divided by the share price is the dividend yield.
Similar Terminology. Of the two, “stocks” is the more general, generic term. It is often used to describe a slice of ownership of one or more companies. In contrast, in common parlance, “shares” has a more specific meaning: It often refers to the ownership of a particular company.
A share is a unit of ownership delivered by a capital company. … Holding one of several shares – in other words, being a shareholder – means that you own a part of the company’s capital but you are not held personally liable for the company’s debts. Generally, shares are freely negotiable and transferable.
What does a 20% stake in a company mean?
If you own stock in a given company, your stake represents the percentage of its stock that you own. … Let’s say a company is looking to raise $50,000 in exchange for a 20% stake in its business. Investing $50,000 in that company could entitle you to 20% of that business’s profits going forward.
Dividends (payment of company profits)
When your company has sufficient profits you might decide to pay your shareholders a dividend. For dividends to be formally recorded they must be documented with dividend vouchers and minutes of a meeting before any payments are made.
Profits are placed in the corporation’s retained earnings account, but the corporation is not required to distribute those profits to stockholders. The decision to distribute profits is made by the corporation’s board of directors.
You can find out the names of the shareholders of a public company through several resources. If you wish to find out the names of large shareholders of a public company that has filed with the SEC, you can find this information by searching EDGAR, the SEC’s Electronic Data Gathering, Analysis, and Retrieval System.