Business By Shares
Business by shares is a form of business where investors, or in this case a shareholder legally owns one or more share of stocks in which a shareholder could be a company or an individual. Shareholders collectively own the company which is why each individual strive to enhance their shareholder value of the company. Since shares signify ownership of the company, any individual or company that buy shares in a company will become part owner of that company. Shareholders are responsible in making key decisions including who will run the company and they will be receiving a share in the profits of the company in the form of dividends. There are four main types of shares according to Businesslink.gov.uk.
Target your Business
- Ordinary – These are standard shares that have no restrictions and special rights. The main advantage of this type of share is that it has the potential to provide the highest potential gains in your investment but on the downside, it also has the highest financial risk.
- Preference – Carries a right for holders to preferential treatment during the distribution of annual dividends but they do not benefit from the increase in the business profits since the shares have a fixed value.
- Cumulative Preference – Provides the rights to the shareholder that if the dividend is not paid one year, it will be carried forward to the succeeding years and dividends must be paid regardless of business earnings.
- Redeemable – The Company has the option to buy back the shares at a later date.
Business Plan Conference