Ownership of a company is divided into many small units. A Share is a single unit of ownership in a company, mutual fund, etc. Shares represent ownership of a company.
When an individual buys shares in a company, he becomes one of its owner called as 'Shareholder of the Company'. The Shareholders have right to elect directors who represents its shareholder and manages day to day activity of the company. Directors do regular business activities of the company and reports to the shareholders in an Annual General Meeting (AGM) which is called once in a year. For big decisions like merger, de-merger, sale of one of the units, etc. permission of shareholder is required. This Permission can be taken in Annual General Meeting or an Extra Ordinary General Meeting can be called for the same.
A Public Company can Issue its shares in Stock Exchange.
Issuing shares in your company on a stock market can provide following benefits to the Company or Promoters:
a. New finance for the company.
b. Release of investment of founding investors.
c. A market valuation for the company.
d. An incentive for staff using shares or share options.
e. A way to raise your business profile.