Shares are classified as securities. Shareholder is the co-owner of the company
The securities market is not as complicated as it may seem at first glance. It is a means of earning, requiring, however, familiarization with the basic toolkit.
A share is a security that is issued by a joint stock company (JSC). This asset enables its owner to take part in the management of the company (if the share is voting) and reckon on a share of profit.
When a company needs funds for development, it issues securities. Interested people, buying an asset, invest a certain amount in a company. In exchange, they receive a part of the company itself in management.
The total value of the shares is strictly limited and equal to the authorized capital of JSC. Legal entities and natural persons become shareholders, and their roles in management are distributed according to the acquired assets.
The share enables voting at shareholders’ meetings (if such a right is provided by the asset purchased), receiving dividends from the profit or a part of the property in case of the liquidation.
The shareholders’ meeting in its turn determines how to dispose of the annual profit: reinvest in business, pay dividends or liquidate a company.
All assets are divided into two large groups: ordinary shares and preferred. The first type of securities enables you to participate in the meeting of shareholders. The receipt of dividends on such shares is questionable (their main purpose is trading on stock exchanges). Payments are made only after premiums are accrued to holders of preferred assets and, if the meeting decides this way.
Holders of privileged assets in their turn are not involved in the management of the company. Except particularly important cases, such as: liquidation or reorganization. But the size of the premium for them is bigger. The ratio of interests on the profit on different share types shall be recorded in the Charter of JSC.
The total number of securities in the hands of the holder gives him additional benefits. For example, 50% + 1 share means a controlling interest, the right to take a final decision on the items that are negotiated at the meeting.
How do the shares relate to securities? The possibility of earning on assets
Dividends have already been mentioned above. Their amount is calculated on the basis of the fiscal year results. Shareholders can reduce the amount of payments, if they consider that the business requires additional funding.
But shares are the most interesting for trade, where profit is determined by the difference in the sum of purchase and sale. The liquidity of ordinary shares is higher. When is the best time to buy assets? After the payment of dividends on the date of the registry closure. At this time, the price is less, according to the amounts paid to shareholders. To sell securities, you should wait from two months to six months.
You should check out the latest business news regularly for the correct investing. Only knowing the trends of the markets, you can predict the quotations of securities. For example, the trade struggle between China and the United States according to expectation has resulted in a decline in sales of American goods in Asian markets, which has reflected in the value of assets.