A company will often issue equity stock to investors and owners in order to raise capital to expand and fund operations. There are several ways to raise capital, including debt and preferred shares; however, ordinary shares of common stock are most well-known by average investors. Ordinary shares, also known as common shares, have many benefits for boཧth the 🦩investor and the issuing company.

Voting Rights

The first is 澳洲幸运5官方开奖结果体彩网:voting rights. Common shareholders can participate in internal corporate governance through voting. Ordinary shares provide a small degree of ownership in the issuing company. Stockholders have a certain amount of say in how the company is run and are allowed to vote on important decisions, such as the appointment of a board of directors. For each share of 澳洲幸运5官方开奖结果体彩网:common stock owned, the stockholder gets one vote, so the stockholder's o🌃pinion becomes weightier when they own more shares.

While this may be an important advantage for an individual or 澳洲幸运5官方开奖结果体彩网:institutional investor who controls a large percentage of a company's stock, for the average retail investor, the main benefits of common shar🅰es are found in their potential for capital gains and dividen𒁃ds, which represent the two ways common shareholders profit from their ownership.

Capital Gains and Dividends

For individuals, investing in the stock market is a relatively straightforward way to generate income. While there are no guaranteed profits, almost anyone can open an online 澳洲幸运5官方开奖结果体彩网:trading account to buy and sell shꩵares of publicly traded stock.

In addition to its transactional simplicity, investment in ordinary shares has the potential for unlimited gains, while the potential loss is limited to the original amount invested. Selling shares at a higher price than the original 澳洲幸运5官方开奖结果体彩网:purchase price results in the investor realizing a capital gain. However, the opposite can also happen; shareholders may realize a 澳洲幸运5官方开奖结果体彩网:capital loss if they sell shares for l🅠ess than they paid for them.ಞ

When a company turns a profit, it often rewards its investors by paying a small portion of that profit to each 澳洲幸运5官方开奖结果体彩网:shareholder according to the number of shares owned. While this dividend is not guaranteed, as with 澳洲幸运5官方开奖结果体彩网:preferred stock, many companies pride themselves on consistently paying hi⛦gher dividends each year, encouraging long-term investment. Shareholders may elect to re▨invest dividends or receive them as income.

Limited Liability

Other stockholders' rights include 澳洲幸运5官方开奖结果体彩网:limited liability, which means that common shareholders are protected against the financial obligations of the corporation and are only liable for their shares' value. They also gain 澳洲幸运5官方开奖结果体彩网:preemptive rights. Shareholders with preemptive rights gain access to new share issues before the rest of the investing public, often 澳洲幸运5官方开奖结果体彩网:at a discount.

Benefits for Issuing Companies

For businesses, issuing common shares is an important way to r💟aise capital to fund expansion without incurring too much debt. While this dilutes the ownership of the company, unlike debt funding, shareholder investment need not be repaid at a later date.

Of course, shareholders do expect returns on their investments, either through stock growth or dividend payments. But the company always has the option to repurchase some or all of its 澳洲幸运5官方开奖结果体彩网:outstanding shares if and when it no longer has need of 澳洲幸运5官方开奖结果体彩网:equity capital, thereby consolidating ownership and increasing the value of shares still available by reduci✃ng the supply.