Friends... What is a share? What is the meaning of Share? Its a very simple question. The term share defines the portion or the part taken from someone for something which will increase his capabilities for that something to run in a better way. Here in the share market, that something is, A Company and someone is Share holder. In a simple form it is just like a company owner taking money from someone for the development of his company by providing him some part of partnership in the business or company. This part of partnership is called as a Share. Later that money will be used for the Company development and to increase future gains. In general the company's total capitalization will be divided in to many no of shares. Here the partnership that each share holder has is proportional to the no of shares he bought in the company. For example if a single person bought 1% of shares from the total 100% shares in the company then that person would be having 1% partnership in the company. He will get 1% profit from the companies overall profits. remember a Share Holder not only shares profits but also losses in the same proportionate.
If you have not understand here is more clear example:
let us assume that person A started a company with investment of 1 Millinion (10lakh) and which is running successfully. After running business for few years he understood that his business has got very big future and demand than what he thought, so he wanted to develop his business by expanding it more. but here is the problem, he needs more money to develop at this stage. assume he needs 10 million (1crore). Now he split the total required investment in to 100 parts to share with others and he asks his friends and public to invest in the business and become partner, so he collects 9million (90 lakh) from 90 people. Now total 100% investment is 1million(10 Lakh) and total Partners Or owners Or Share Holders took part to contribute that 1million(10 Lakh) is 91 people including founder Mister A. Now mister A holdes 10 shares for his 1million(10 Lakh) which is 10% of 10million(1 Crore) and remaining 90 people will have 1 share each which is 1% of 10million(1 Crore).
now if company makes 10million(1 Crore) profit in a year then the the founder will get 10% and others get 1% each. At the same time if company gets loss the same will be shared to all in the same % of share holding. In addition to the profit partners may get salary if they are working in company that is other topic. hope you understood now about share.
If you have not understand here is more clear example:
let us assume that person A started a company with investment of 1 Millinion (10lakh) and which is running successfully. After running business for few years he understood that his business has got very big future and demand than what he thought, so he wanted to develop his business by expanding it more. but here is the problem, he needs more money to develop at this stage. assume he needs 10 million (1crore). Now he split the total required investment in to 100 parts to share with others and he asks his friends and public to invest in the business and become partner, so he collects 9million (90 lakh) from 90 people. Now total 100% investment is 1million(10 Lakh) and total Partners Or owners Or Share Holders took part to contribute that 1million(10 Lakh) is 91 people including founder Mister A. Now mister A holdes 10 shares for his 1million(10 Lakh) which is 10% of 10million(1 Crore) and remaining 90 people will have 1 share each which is 1% of 10million(1 Crore).
now if company makes 10million(1 Crore) profit in a year then the the founder will get 10% and others get 1% each. At the same time if company gets loss the same will be shared to all in the same % of share holding. In addition to the profit partners may get salary if they are working in company that is other topic. hope you understood now about share.
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