Share Ownership: An Overview
One of the most common forms of financial investment is in shares, portions of a company that are assigned a specific monetary value. Shares represent a portion of the assets attributed to the company and the profits the company makes and may entitle the holder to a dividend (a proportional share of profit made by the company that is not re-invested). As there is a finite number of shares in any listed company, individuals or investment firms can amass a large portion of the shares available, theoretically even leading to a majority hold in the company being invested in. The amount of shares anyone owns in a company is known as a 'stake'.
Voting And Company Policy
Shares can be owned by just about anybody or any company providing they have purchased the shares through the correct channels. In the United Kingdom the only criteria individuals must meet in order to buy and sell shares is that they are over the age of eighteen. Being a shareholder comes with some entitlements.
'Common' shares, one of the two main share types (the other being 'preferred' shares), entitle the holder to vote in the election of the board and to have a say in some policy matters, usually raised at the Annual General Meeting. Small-time investors usually opt to allocate such votes to board members, and it is usually the case that large investment firms and superannuation funds have such large stakes that their proportional votes automatically decide matters.
Dividends
Share ownership also entitles the holder to a share of the company's profits, and to the liquidated assets of the company invested in should the company go into liquidation. Shared profits, or dividends as they are more commonly known, are not compulsory and companies may choose not to pay them to their investors; conversely if large profits have been made, the company in question may choose to pay several dividends over the space of a year.
In the case of company liquidation there is never a guarantee that there will be any finances left for shareholders after debts have been paid. This is one of the many risks of share investment - retaining your financial outlay, let alone making a profit, is never guaranteed.