Shares, Shareholders and Share Prices

Flashcards covering the definitions and characteristics of shares, shareholders, and different types of companies based on the provided lecture notes.

What is a key characteristic of an "incorporated" business?

It is a separate legal entity.

Who are the owners of an incorporated business (company)?

Shareholders.

What are the two main kinds of company mentioned?

Private Limited Company and Public Limited Company.

What is a characteristic of shares in a Private Limited Company regarding public trading?

Shares cannot be traded publicly.

Describe the typical number of shareholders in a Private Limited Company.

Usually just one or a few shareholders.

What is the minimum share capital required for a Public Limited Company?

£50,000.

Can shares of a Public Limited Company be traded on a public stock market?

Yes, shares may be traded on a public stock market.

What kind of information disclosure is required for Public Limited Companies?

More detailed disclosure of information is required.

What are the two main ways shareholders earn rewards from their business ownership?

Dividends and Capital Growth (also known as Capital Gain).

What are dividends?

Payments made to shareholders by the company from earned profits.

How is the amount of dividend paid typically expressed?

Per share.

Is there a general requirement for companies to pay dividends?

Normally no requirement, but most quoted companies do.

How does Capital Growth arise for shareholders?

From an increase in the value of the business, reflected in an increase in a share price.

When is Capital Growth (or Capital Gain) officially "realized"?

Only when a share is sold.

Is Capital Growth guaranteed?

No, there is no guarantee that a shareholding will increase in value as business value can change both ways.

What is a share?

An individual part of the total issued share capital of a company.

What are the most common type of shares issued by a company?

Ordinary shares.

What do ordinary shares typically provide to shareholders regarding voting rights?

Equal voting rights based on the number of shares held (shareholding).

Do ordinary shares always guarantee a dividend?

Shares qualify for a dividend, but only if one is paid by the company.

How is the shareholding percentage calculated?

The number of shares held compared with the total number of shares issued.