What are Shares of Stock and how are they used?
Shares of stock are written articles that represent the amount of money invested in the corporation by an individual shareholder. The corporation determines, at the outset of incorporating, how many shares it shall issue and what classes of shares (No Par, Par, Common, Preferred, Participating, etc.) it will issue. In a close corporation, the number of shares are determined and sold to only one or a few investors. In other corporations the shares are sold to many investors or to the public. Each share represents ownership in the company, and it entitles the holder to certain types of rights (voting rights, dividends, etc.). The different classes of stock determine how dividends will be paid, and how much money will be paid for each share of stock in the corporation. Each share certificate will be marked with the amount of par (the minimum amount of money that must be paid for the share). Share certificates may also be marked as no par, with no minimum amount being paid for the share.
