Share is a unit of ownership in a corporation, and stock is a number of units (shares). During the corporation setting process, board of directors usually decide the number and types of share a corporation should be authorized to issue, and at what terms and prices. Having a share in a corporation actually stand for your ownership in that ratio, but your right to profit, management and voting will further depend on types of share you have .buy-laws of the corporation and number of shares in total percentage. For example if corporation is authorized to issue:
• Preferred Shares &
• Common Shares
Now in case you have stock in preferred shares, you may be entitle to preference in profit share over the common shares, but may not be able to vote or participate in management. Situation may be reverse if you have stock in common shares or called ordinary shares.
Deciding the authorize numbers and types of shares, is very crucial decision, which usually depends on several factors, such as:
• Attracting different types of investors.
• Management Concentrations.
• Personal choices.
• Size, nature and initial funds required for the business venture.
• Future expansion needs.
• Working on Owners' (inside) equity or Debit (Outside) equity .
Shares are issued to investors (owners) by issuing stock certificates duly signed by the authorized officers of the corporation and are recorded in the official maintained stock recording register. Any further sale or surrendering or transfer is updated in the registered on regular basis. The number of shares, type of share, holding period in combination of all, is your stake on distributable profit (dividend).
Shareholder (s) in a corporation are the owners of corporation for the percentage or for a ratio of total shares v. share purchased or possessed. For example if a shareholder possesses 100 share of the total issued 100,000, he/she holds 1% of ownership of a corporation. The calculation is not so simple some time, if a capital structure of corporation has variety of shares and stocks and has adopted a complex investment criteria.
But in a simple sense a shareholder is the owner in the percentage of share (unit) held to the total issued shares (Units).
Shareholder can be an individual or entity, and enjoy several rights, such as participating in shareholders meetings, right to profit, right to management, right to vote etc. , that further depend what kind and how many shares are possessed.