Stocks are shares in the ownership of a limited liability company. Stocks can also be called shares.
When someone buys stocks, they own a piece of the company. How much of the company each individual owns is determined by how many shares they own relative to how many shares the company issues in total.
Stocks can also be called equity.
Who can buy stocks
When a company is set up, the owners make decisions about the number of shares, their cost, and the overall ownership structure.
Anyone who buys shares at the start, can take part in determining the share size, the total number of shares and their cost.
Shares can also be bought at later times: Unlisted companies sell stocks to investors that they get to choose, while public companies sell their shares to anyone.
Shareholder register
People who own shares are called shareholders. All shareholders should be listed in the shareholder register.
The register contains their names, info about how many shares they own, and can also include what they’ve paid for shares.The shareholder register should be updated every time shares are sold, purchased, or transferred.
Pros of owning stocks
The price of a stock is what you pay for it, but its value can change based on market conditions, the company’s performance, and other factors. It can also be influenced by intangible assets, or goodwill, like a strong brand or a good reputation.
Investors buy stocks hoping they will increase in value over time and provide a return on their investment.
If the company is doing well, shareholders can get paid a portion of the profit. This is called distributing dividends. Shareholders are also free to sell all or a portion of their shares at any time, and if the shares have increased in value, they’ll make a profit on those sales.