What is a share

A share is the minimum unit of a shareholder’s participation in the capital stock of a “corporation”. Shares must all have the same par value, that is, they must be shares of equal value. If you buy a share you become a partner or shareholder, meaning you own a piece of the company, with all the rights (you share in the profits) and burdens (you bear the losses).

The division of capital into many shares and their subsequent placement in the market allows the company to finance its business with equity and a saver, like you, to invest sums of money in a stock that can pay dividends and appreciate in value and/or lose value.

Shares can be of TWO TYPES:


If they are sold and bought on the stock exchange according to the market price. These are easier to buy or sell because they have greater transparency.


If they are exchanged as a result of private agreements with shareholders. For this reason they can present major problems at the time of sale.

Companies, in their bylaws, may provide for different categories of shares with differentiated administrative and economic rights, i.e., how you can participate in shareholder meetings and what share of profits you are entitled to.

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If you own this share, you do not have voting rights at shareholders' meetings, but you only have economic privileges (e.g., a higher dividend percentage, i.e., the share of profits that are redistributed to shareholders).


If you have these shares you have priority in distribution in the share of profits but you only have voting rights in extraordinary meetings.


If you have these shares, it means you can vote at shareholders' meetings and the weight of your vote is more than the value of the share you own. These shares are typical of unlisted companies, but you may also find them in listed companies at the time that multiple-voting shares were present before they went public.

What is the difference between shares and bonds?

By buying stocks, unlike bonds, you are not making a loan to the company, but you are providing risk capital.

Therefore periodic coupons provided by a stock (dividends) are not certain but variable and dependent on the evolution of the earnings of the issuing company and its distribution policy.

Another difference between stocks and bonds concerns the lifespan of these financial instruments. Equities have an indefinite maturity and can provide potentially unlimited cash flows over time and, in addition, provide no guarantee of recovery of the initial principal.

Bonds, on the other hand, have a well-defined maturity and, more importantly, have a clearly defined return for the buyer. The principal invested plus accrued interest is returned.