What is a Stock?
What is a Stock is a debt security, which gives its owner (shareholder) as the right to receive dividends - in other words, on the part of the profit of the joint stock company, and have the right to participate in management of the joint-stock company, as well as the share of the property remaining after the liquidation of the this joint-stock company. Share is a registered security.
Investing in the shares in one or another company, and thus contributing to the development of its business, the shareholder becomes a co-owner of the company. The market value of the enterprise in many respects is determined by the price of the shares.
The attraction of the capital is only in the moment of issue (emission) of shares in circulation; hereinafter the same increase the value of the shares does not entail the inflow of capital to the Issuer - the person exercising the emission of securities in circulation. Nevertheless, the growth of price of value of shares is an important indicator of their investment attractiveness and increase the value of the company, which attracts potential investors.
What is a Stock - Shares are divided into two types: ordinary and the ordinary. In General, their main difference is the fact that the ordinary shares allow the shareholder to take part in the voting at the meeting, but the dividends on him may not be paid, while the holders of preferred shares will be able to take part in the voting only for a limited number of issues, but they are guaranteed to get their dividends. Consider each of the types of shares in more detail.
What is a Stock Preferred stock
Dividends on this type of shares are paid to stable, however, the right to vote at a shareholders ' meeting, they do not give. However, the holders of preferred shares may participate in the General meeting of shareholders and have the right to vote at the decision of questions:
•on the reform and liquidation of the company;
•in all of the following meetings, going after the annual General meeting of shareholders, on which was accepted the decision on complete or partial payment of dividends on preferred shares; the the right shall be extinguished after the first full payment of dividends.
Joint-stock company has the right to place one or several varieties of shares privileged type, their nominal value is limited to 25% of the Charter capital of the company.
What is a Stock Types of preferred shares:
•Cumulative share - unpaid dividend for this type of preference shares is accumulated and paid in full before the payment of dividends on ordinary shares.
•Shares of participation - in addition to the annual dividend, give the right to participate in a share of the profit on a par with ordinary shares; shares of this type can also be "not involved" in the distribution of the additional profit.
•Convertible shares may be exchanged by the owner of the ordinary or preferred shares of another type; the conversion of preferred shares into bonds is not allowed.
• Shares, redeemable in the future can be purchased from a shareholder of the company. Shares of this type of several similar to bond with the offer, but they have a lot of risks.
What is a Stock type A Preferred shares
The issue of this type of shares was carried out during the IPO, the workers of transformed enterprises received them free of charge. Dividends shall be paid with 10% of net profit. Shares type A are entitled to attend shareholders ' meetings, held annually, but do not give the right to vote.
What is a Stock Preferred shares of type B.
Issuance of these shares is made at the expense of the authorized capital and belonged to the Fund. Payment of dividends is made with 5% of the net profit received by the enterprise. Shares type B can be no more than 25% of the authorized capital.
What rights are the owners of preferred shares:
•the right to receive the established dividends or interest to nominal value of shares;
•the right to receive the part of the property of joint-stock company in case of reorganization or liquidation of the company (i.e. the liquidation value).
Preferred shares of the same type have the same rights and the same nominal value. However, the articles of Association of the joint-stock company is determined by the amount of dividends and/or liquidation value of preferred shares of any kind.
What is a Stock Advantages of the preferred shares to ordinary:
Compared to the holders of ordinary shares, holders of preferred shares have more rights in the procurement of fixed size of dividends, as well as the liquidation value - that is to a considerable extent, and attracts investors.
What is a Stock of Ordinary shares of
Dividends on this type of shares are not guaranteed and are paid from the part of the profit remaining after the payment of interest of the owners of preferred shares. But give the right of vote at the General meeting of shareholders (in contrast to the preferred shares, which grant the right to vote, but to guarantee a stable payment of dividends).
The holders of ordinary shares are the real owners of the company, bearing the responsibility for it and receiving in themselves the maximum risk.
The ordinary shares are similar to a perpetual loan, which is given to the company in exchange for a share of the profits. Articles of Association of the company shall transfer all of the rights associated with the shares. One of the most important for the holder of the ordinary shares is entitled to vote at shareholders ' meetings, when it comes to the activities of the company, appointment of Directors, approval of the proposed management of the company the dividends, and in addition - the right to a proportionate share of the assets of joint-stock company in case, if it stops its activity.
Among the rights which are the owners of the ordinary shares the following:
•the right of participation in the meeting of shareholders, having the right to vote in solving all the issues within the competence of the the General meeting;
•the right to dividends paid by, mainly, in the case of receipt by the company of profit;
•the right to a part of the property (liquidation value) in a situation of liquidation of the company.
However, the ordinary shares have the same par value and provide the holders equal scope of rights.
Conversion of ordinary shares into preference shares, as well as in bonds and other securities is prohibited.
Placement of ordinary shares by means of open subscription of more than 25% of the placed previously allowed, only if the decision has collected three-quarters of the votes at the General meeting of shareholders.
The holder of ordinary shares obtain the right to vote at meetings of shareholders not earlier than make full payment for the shares. The exception of shares acquired by the founders of a joint stock company with its organization.
The voting right is not granted:
•if not made full payment for the shares within the time specified when placing;
•when redemption by the company of shares from shareholders.
In conclusion: depending on the conditions and preferred and ordinary shares may be as voting, and deprived of the right to vote. Everything depends on the conditions. Voting share (preferred or common) gives its holder the right to vote at the decision of any matter submitted to a vote at the General meeting.
