Stock Market Shares
Stock market shares are sold by companies in order to raise capital for expansion or for certain projects. Investors who buy stock market shares are often referred to as shareholders or stockholders. The value of stock market shares may appreciate or depreciate depending on company performance and numerous market factors. When the value of stock market shares increase, stockholders are entitled to dividends, which are the income received from shares. Likewise, when the value depreciates or if the company is liquidated, stockholders may experience losses on their investments. There are numerous types of stock market shares. This article will discuss the different kinds of stock market shares.
The total number of stock market shares authorised by a company are called authorised shares. Not all authorised stock market shares are available to the public. This is because many companies prefer to keep some of their shares in order to have some control during shareholder voting. Voting is the only way to increase the number of authorised shares.
Float shares are the actual number of stock market shares available on the market. These are shares that are unrestricted. Stock market shares that are floated by companies are made available to the public through the initial public offering (IPO).
Stock market shares owned by the company are called unissued shares. These shares are withheld from the public and employees in order to maintain the holdings of the company over its own shares. Unissued shares are often used as a strategy to control voting rights and to keep the company value from fluctuating in the market.
Employees can be given stock market shares as part of compensation plans or incentives. These stock market shares are called restricted shares. Restricted shares are registered with the company. Before making any trades with restricted shares, the company must be notified.
Outstanding shares are the stock market shares that the company issues. Included in outstanding shares are the float and restricted shares. Outstanding shares usually make up for the majority of authorised shares.
Besides these types of stock market shares, there are also classes of shares. Depending on the class of shares owned, stockholders may be entitled to voting rights during important company decisions. Both company member shareholders and public shareholders may be part of the voting body. The class of share will also determine certain conditions attached to the stock market shares. This includes the manner in which dividends are paid, term contracts and other rights.