Stock Basics – Shareholders and their Rights
Stock, to be literally defined, is generally an inventory or a store of goods for sale, a supply of any kind that can be used for generating benefits in a form of capital. But in the world of finance that involves many big, renowned commercial corporations, stock is referred to the capital raised by a company through the issue of shares, or the total of shares held by a single shareholder. And these particular companies that are formed through partnership are sought to improve shareholder value.
These shareholders can be a group of individuals or companies as a whole. A shareholder has the right to own one or more shares of stock in a joint stock company. Companies of the stock market present shareholders with certificates of ownership that give shareholders the privilege to transfer their ownership interest by selling their stock to others at any time. Depending on the class stock, shareholders may also have a say in the election of the board of directors, and they have the right to share in distribution of the company’s income, the right to buy new shares of the company, and of course, the right to receive a sum of the company’s assets during the liquidation. The company’s boards of directors are entitled by fiduciary duties to act in the best interest of the shareholders, but the shareholders do not necessarily practice such duties towards one another.
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