fbpx

What exactly is a share?

A share is a share in a company, the so-called stock corporation (AG). When you buy a share you become a co-owner of the company. The owners of the shares are called shareholders.
Reading time: 2 Minutes

Loading

TransparentShare - What exactly is a share?

Why does a company offer shares for purchase and thus also company shares?

Company XY AG wants to expand and needs 10 million capital for this. Unfortunately, XY AG does not have equity of 10 million, so it has to finance the amount required for the investment. There are two ways to do this:

  1. She can take out a loan from a bank and has to pay interest accordingly.

  2. It can issue shares and thus increase its equity.

Companies are almost always financed by equity and debt.

The issued shares can now be bought from a certain deadline via banks or online brokers.

The newly issued shares (also called new shares issued) can then either be bought by existing shareholders or by new shareholders.

The rights of shareholders

With the purchase of shares you automatically receive different shareholder rights, which are regulated in the Stock Corporation Act. These are divided into administrative rights and property rights.

The Administrative rights are there to represent and enforce the interests of shareholders. In most cases, you will receive one voting right per share that you can exercise at the AG's annual general meeting. An AG is obliged to call a general meeting every year. All shareholders are invited to this because important decisions, such as the election of the supervisory board, are voted on there.

The Property law, includes the right of the shareholder to participate in the profits of the company, a participation in the liquidation proceeds if the AG has to be liquidated and the right to buy new shares if, as in our example, new shares are issued.

To let their shareholders share in the company's profits, many companies pay out a dividend once a year. If you are a shareholder, this dividend is automatically transferred from the corporation to your deposit account.

How do you make money with stocks?

Besides the dividend but shareholders can also get through Price gains make money with stocks. Since shares are traded on the stock exchange, their price depends on the demand of buyers and the offer of sellers. If there is a lot of demand because many people think that the company is worth more than its current market value, the share price rises. However, if there are more interested sellers than buyers, the price will continue to fall until enough buyers are found to take their shares from the sellers. Of course, the latest news about a company or the entire industry also influence people's buying / selling behavior.

This video will also help you better understand what stocks are exactly.

 

How do you find the right stocks now?

TransparentShare will help you with this. Our app evaluates stocks daily with data-based key figures and recommends them to buy or sell.

Just try it out without obligation.

 

And now have fun trading stocks!
Your TransparentShare team

Loading

Share post

The last posts

3 undervalued stocks with potential

3 undervalued stocks with potential

Stock analysis September 28, 2023: 25 buy recommendations. 3 undervalued stocks with potential. Intuitive Surgical: Interesting introduction or hot…
Susan Levermann: 2 important tips for newbies to stocks

Susan Levermann: 2 important tips for newbies to stocks

Stock analysis September 20, 2023: Susan Levermann - 2 important tips for stock newcomers. 3 undervalued stocks with potential...
Share of the week: Lennar

Share of the week: Lennar

Stock analysis August 30, 2023: 12 buy recommendations; Stock of the week: Lennar - Warren Buffett buys home building companies despite real estate crisis;…

Simply find the cheapest depot!

Compare now without obligation and without specifying an email address and find the cheapest depot.

OnVista Bank - The new trading freedom

Test for 14 days

Ready to go in 30 seconds

* Without specifying a credit card

en_US
Free stock analysis
Get 1 month of TransparentShare Premium for free!*