A share is a security that provides its owner with the right to participate in the management of a joint-stock company and a part of the profit in the form of dividends.
Main types of shares
All shares can be placed publicly or closed (by distributing shares in a narrow circle of persons). By the nature of the placement, there is a distinction between the primary market for shares and the secondary market, where transactions with previously placed securities take place.
In the most general form, two types of shares are distinguished - ordinary and preferred. Holders of ordinary shares can participate in the distribution of profits. The difference between preferred shares is that they bring permanent dividends, but in return, their holder is deprived of the right to manage. Their analogue is the founders' shares, which are distributed among the founders.
Another basis for classification can be an industry principle. According to it, for example, shares of oil and gas, telecommunications, metallurgical companies, etc. are distinguished.
According to the stage of issue and payment, they distinguish between declared, placed, and fully paid shares.
Declared shares are the maximum number of shares that can be issued, fixed in the company's charter. At the same time, the company may never issue a given number of shares. Outstanding shares are those that have been purchased by shareholders and may include fully paid shares for which full payment has been made by shareholders. Not all offered shares are fully paid, since some of them can be purchased in installments.
By the type of issuer, shares of CJSC and OJSC are distinguished. The shares of the CJSC involve their acquisition by a narrow circle of persons; they are issued in the form of a closed issue. OJSC shares can be resold without agreement with other shareholders.
A distinction is also made between registered shares and bearer shares. The name of the owner of registered shares must be registered in the register, and when they are sold, the data of the new owners are entered. They are used to analyze the shareholder structure. Among their subtypes, a distinction is made between voted shares, which can be transferred only with the permission of the issuer. There are no such restrictions for bearer shares, they assume a free sale.
Packages of shares and their types
As a rule, shares are not bought individually, but in packages. Owning large blocks of shares allows you to influence the activities of the company.
Among the blocks of shares, blocking, controlling and minority block of shares are divided. Blocking stake - in theory, this is more than 25% of all shares (in practice, it may be less), its owner has the right to veto decisions of the board of directors.
The controlling block of shares (50% + 1 share) allows their owner to independently make decisions regarding the functioning of the joint-stock company, as well as appoint managers.
As a rule, decisions in a joint-stock company are made at a general meeting by a majority vote. But the larger the company, the more common its shares are among minority shareholders. Their shareholding does not allow them to participate in management.
