Companies can own shares in other companies

shares

A share is a security, which is a Securitized share in a company. With the acquisition of a share, the owner has certain rights of participation in the issuing company, the stock corporation. The joint stock companies issue shares in order to obtain capital for financing.

Basics

In Germany, many companies choose the legal form of Joint-stock company)because that way they can more easily obtain capital by issuing shares. If the company meets certain requirements, the company can listed on the stock exchange become. The company can then issue shares that can be purchased by institutional or private investors. By issuing shares, the company receives equity that it needs for financing. The owner of a share is therefore not a creditor, such as a bank that provides the company with a loan, but a co-owner of the company. This increases with an increasing share in the company Owner's right to participate. Should a share buyer acquire more than 50% of the shares in a company, the owner also has more than 50% of the voting rights. He would therefore be able to exercise a controlling influence over the company. The development of certain share prices is in one Stock index reproduced. There is the leading index DAX for the German stock market, the Dow Jones for the American and the Nikkei index for the Japanese. Other well-known indices are, for example, the STOXX, MDAX and NASDAQ. There is a separate form of investment for such stock indices, the so-called index funds.

Stock types

  • Shares can be in Bearer shares or Registered shares be subdivided. In the case of registered shares, the owner of the shares is entered in the share register of a stock corporation with his name, date of birth and address. Registered shares are therefore not anonymous, but personalized. The company therefore knows the owner of a registered share. The situation is different for bearer shares. Here, too, there is an owner, but this is only referred to as the owner in the company's share register. From the company's point of view, the owners of bearer shares are anonymous investors. As a result, it is also unproblematic when bearer shares are sold or traded. If a bearer share changes hands, no change needs to be made in the share register.
  • In addition, shares can be differentiated according to the extent of the evidenced rights. Here is between Common stock and Preference shares to distinguish. Ordinary shares are shares that grant the shareholder statutory and statutory rights. In contrast, preference shares are shares which create additional rights. Here, for example, the payment of a minimum dividend in economically poorer times comes into consideration. Preferred shares are therefore more advantageous for the shareholder.
  • A third type of classification for shares is the subdivision into Par value shares and Quota stocks. In the case of quota shares, the share is not assigned a fixed amount of money, but a share of the company's equity, for example a share of 1 in 10,000 (corresponds to 0.01%). On the other hand, there is a nominal value for nominal value shares, which results from dividing the share capital and the number of shares issued.

Legal basis

Companies that want to issue shares are often run in the legal form of a stock corporation. For them, the specifications from the Stock Corporation Act (AktG) essential. In Germany, however, shares can also be issued by a limited partnership. Which type of company is more advantageous for the company has to be decided on a case-by-case basis. By issuing shares, companies must grant shareholders certain rights. This includes, among other things, a share in the balance sheet profit, a right to information, a right to participate in the general meeting and a right to vote.

When issuing shares, the company must set a minimum value of one euro in accordance with the provisions of stock corporation law (cf. ยง 8 AktG). In addition, shares may not be divided. However, it is possible to issue additional shares. On the capital markets there is then another Capitalization of the company spoken.

The importance of the share

Shares are essential for companies. By spending it, they can receive additional capital, which they can use for investments, among other things, which in turn promotes the growth of the company.

For the institutional or private investors equities are becoming increasingly important. While stocks were only viewed as a speculative asset investment in the past, they are now considered an alternative investment. In times of low interest rates in particular, stocks are becoming increasingly popular. Investors can make money by investing in stocks in two different ways. On the one hand, investors participate in the company's profits by giving the company a dividend on the other hand, investors can benefit from increases in value by trading stocks. The latter reason However, it also carries risks, as it is not uncommon for stocks to lose value and thus can also lead to a lower sales price.

emission

In the financial sector, the issue of shares on a capital market is also called emission designated. Issues thus represent the initial public offering (also: IPO) of a company. Issues are also carried out in the case of capital increases and the establishment of new companies.

The Issue price, i.e. the price of a share upon issue, is often determined as part of the order book procedure. In this case - to put it simply - prospective buyers are asked within a certain subscription period to submit offers at a specified interval. With an interval between 50 euros and 75 euros per share, a potential investor could, for example, choose himself which amount he would like to spend on the share. Depending on the demand, the highest bidder would then be served first after the subscription period has expired. If there is a great deal of interest, the issue therefore leads to a high average initial issue price, and if there is little interest, it leads to a lower and therefore cheaper issue price.