Stocks, shares, or equities are a financial instrument that represent ownership of a privately held or publicly traded company that has issued these instruments. The term stock, share, or equity are interchangeable and references to either is a reference to all. When a company issues stock of its company, they are selling interest in the company.
A share of a company would represent a portion ownership of a company and this is done by a company to raise capital or allow for the transfer of ownership from one person or entity to another. For instance, if a company has 100,000,000 shares it would like to offer to investors, an individual can buy any number of shares of this company from 1 to 100,000,00 at a specified price. If the issuing price is $1.00 per share then the company would be raising $100,000,000.00 for use within the company.
While the term stock represents the instrument, the term share represents a portion of a company. A company may have an allotted amount of shares it can issue that is different than the total shares issued. For instance, the company may have 1,000,000,000 authorized to issue. But, the company may only issue the aforementioned 100,000,000 shares. If the company issues the 100,000,000 in that one instance, then the total number of shares issued are the shares outstanding and represent 100% of the ownership of the company.
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Should the company need to raise additional funds to expand its operations, then the company may issue more of the shares authorized. In the instance above, if the company issues an additional 100,000,000 shares, the shares authorized is still 1B, but the new shares outstanding would be 200,000,000 shares. Any individual that had shares in the first issuance, which had a 100% ownership level, now would have 50% ownership of this company. This would be termed stock dilution.
Therefore, 100% ownership of the shares outstanding would be the 200,000,000 million shares outstanding.
Normally, holders of the shares outstanding, or shareholders, are able to vote on important issues regarding a company. Shareholders typically have one vote per share outstanding that they hold. So, if an individual owned 10,000 shares of a company, their vote, would count for 10,000 yeas or nays an an issue.
Some shares may be authorized to have more voting power per share than others. Famously, or infamously, Mark Zuckerberg, CEO of Facebook, has super-vote powers with his shares that he owns. Shareholders may have some multiple attached to it that allows for their votes to count for that multiple per share. For instance, if a shareholder has a multiple of 100x their share count, and they held 10,000 shares, their vote would carry the weight of 100,000 shares. In the case of Facebook, Mark Zuckerberg’s super-share vote capabilities give him the majority say in any vote for the company shareholders.