In simple words, a share in a share market means the right in the profits of the company. Suppose you are holding 1 share in the company that has a total of 100 shares. This company has earned 100 rupees. You will get 1 rupee profit and other shareholders will get the remaining amount. This amount depends on the number of shares owned by the shareholders. The company can decide not to give those 100 rupees to the owners. The company can use it to earn more money in the future. There are some formalities and exceptions but this takes place if the majority of the shareholders agree with it.
The management of the company.
There are many people holding the shares in the company so not everyone can work for the company daily and thus the people who purchase the majority of the shares in the company have the right to appoint the employees. These employees can take decisions and work as per the directions of the owners of the company.
Yes, there are some exceptions but generally, if you have more shares in the company then you have more power in the company and that’s why the shares are important.
There are mainly two types of shares.
Equity Share: This type of share is common as it shows the exact number of ownership percentage in the company. If there are 100 shares in the company and you have purchased 10 shares then you will have 10% control in the ownership of the company.
Preference Share: This type of share has a few more rights as compared to that of equity share. The person holding preference share has the right to claim profit before giving it to the equity shareholders. When the company shuts down (this term is known as winding up of the company) even then you can claim the money before equity shareholders if you are a preference shareholder.
This is just basic information about the main types of shares we will learn more about equity and preference shares in separate articles. This article explains the concept of a share in the share market.
A share in the share market means any share listed for sale in the share market. In India, there are mainly two share markets, Bombay stock exchange (BSE) and National stock exchange (NSE). Anyone can purchase these shares and become owners of the company.
How to purchase a share in the share market?
These shares are maintained in the electronic form and the account in which these shares are kept is known as Demat account. If you are purchasing a share in the share market then you make payment according to the price of the shares and you receive the shares in your Demat account.
How to open a Demat account?
You can create a Demat account by filling the online application form of the broker. Zerodha is one of the leading discount brokers in India, CLICK HERE to open a Demat account with Zerodha. You can purchase a share in the share market and sell it later through your Demat account.
Long story short, a share in the share market means the instrument you purchase. Then you become the owner of that company listed on the share market.
We will be covering the topics related to the share market so make sure to subscribe for the email newsletter and share this article with others.