X

What are shares

0

So what are shares in a company mean ? What are the benefits of buying a share or stock ?

In very simple terms share is a like a partnership in a company if you buy and hold a company share you are called the shareholder and you hold part ownership of the company. The company in turn needs to inform all shareholders about company decisions and reports since you are an actual owner of a small part of the company.

Why company issues share ?
Companies issue share with their IPO listing so that they can get money from investors like us. This money in turn helps the company to grow and obviously the shareholder gets benefit of dividend as well as rising price of share if the company is doing good. We have discussed this in details at why share price rise and fall ?

Shareholders are classified into different categories depending on who is holding companies shares like

1. Promoters - Owners and related investors who started, running or are affiliated with the company.
2. FII  shareholders - Foreign institutional investor
3. DII shareholders  - Domestic institutional investors like Mutual Fund groups, LIC etc.
4. Retails Share holders - That is probably you and me.

Listed companies who issue shares are required to detail the Share holding details called Share holding Pattern (SHP) intermittently to the Stock Exchange. Stock Exchange in turn make these Share holding pattern details on their website.

Shares are classified in to different types depending upon the benefits they have to the shareholder like

1. Preference shares
2. Differential Voting Right (DVR) shares
3. Employee stock ownership plan (ESOP) shares
4. Equity shares

You and me aka retail investors generally hold these EQUITY Shares from the stock market Exchange. Keeping things simple in this stock market course, we will deal only with EQUITY Shares.
Lets see now what is Stock Market exchange NSE and BSE