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Stocks For Beginners Part Two

By Guest

In part one of my primer course on stocks, I let you know that businesses divide stocks into shares, and that each share represents a fraction of ownership. I told you that shares may come with different ownership rules, privileges, or share values. I also told you about the two forms of stock: common stock and preferred stock. Now we’ll talk about shareholders.

A shareholder is a person or company that legally owns one or more shares of stock in a joint stock company. Shareholders get special privileges that depend on the class of the stock. There are a number of privileges that can come with stock that include: the right to have a vote on things like elections to the board of directors, the right to share in distributions of the company’s income, the right to buy more shares that are issued by the company, and the right to a company’s assets when a company liquidates. Directors and officers of a company are bound by fiduciary duties to act in the best interest of the shareholders.

Owners of a company may sell shares to build additional capital for investing in new projects within the company, or to get rid of some of their holding so they have more money freed for their own private use. When you buy a share you are literally sharing in the ownership of the company, a fraction of the decision making power, and potentially, a fraction of the profits.

Because there could potentially be thousands of shareholders in a large publicly traded corporation, shareholders will use their shares as votes in the election of members of the board of directors of the company.

Usually, each share equals one vote. Corporations might issue different classes of shares though, which might have different voting rights. Because shares are proportional to votes, owning most of the shares permits other shareholders to be out voted, which is how original owners of a large business will usually still have control of the company. To Be Continued In Part Three.

Mallory Megan works for Rapid Recovery Solution and writes articles about commercial collection agencies.

categories: collection quote,collection agent,debt problem,medical collections,collection agencies,collection companies,stock market crash,bonds,stocks and bonds,stock market,stocks

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Article Citation
MLA Style Citation:
Guest, Guest "Stocks For Beginners Part Two." Stocks For Beginners Part Two. 10 Jul. 2010. 11 Oct 2014 <>.

APA Style Citation:
Guest, G (2010, July 10). Stocks For Beginners Part Two. Retrieved October 11, 2014, from

Chicago Style Citation:
Guest, Guest "Stocks For Beginners Part Two"

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