The most important facts about shares at a glance

• Shares are nothing more than shares in the equity of a company listed on the stock exchange
• A share owner is also called a shareholder
• The shareholder receives regular dividends from the public company and may also have the right to participate in decisions about the company's affairs at shareholders' meetings
• Share prices are determined by supply and demand
• Numerous studies have shown that, in retrospect, no other type of investment can compete with shares in terms of returns over the long term. 

What types of shares can be found?

Basically, shares can be divided into ordinary shares and preference shares as well as into registered shares and bearer shares. On the one hand, these categories say something about what rights a share owner receives, and on the other hand, it is about the transferability of the securities. But let's take things one step at a time.

Someone who owns ordinary shares in a company has the right to participate in certain decision-making processes at general meetings of the respective public limited company. The more shares someone has, the more voting rights they have and the greater their influence. There are two types of general meetings at which the shareholder can exercise his or her voting rights.

On the one hand, there are general meetings, which usually take place once a year. At such meetings, holders of ordinary shares can, for example, elect members of the supervisory board.

On the other hand, there are extraordinary meetings, which are convened when certain unforeseen events take place. In such a setting, shareholders can, among other things, have a say on capital increases or on possible takeovers of another company.

Preference shares: For secure and higher dividends

Those who own preference shares have no voting rights, at least in Europe, but shareholders who own such shares enjoy preferential treatment when it comes to dividend payments. Dividends are annual profit payments to share holders.

Those who own ordinary shares are equally entitled to dividend payments, but holders of preference shares are given preferential treatment when it comes to distributions. For example, holders of ordinary shares may receive less in dividends than holders of preference shares, or may not receive any at all.

If a company is not able to pay regular preference dividends, preference shares also receive voting rights. In the event of a company bankruptcy, preference shares also retain a greater residual value than is the case with ordinary shares.

Bearer shares and registered shares: What are the differences?

These two types of shares are primarily concerned with the transferability of the securities. Bearer shares, for example, are basically transferred "informally" from one owner to the new one, whereas the transfer of registered shares involves more effort.

Bearer shares are basically bought and resold anonymously, and in the case of registered shares the owner is entered in the register of a public limited company. The shareholder is therefore known to the company by name and date of birth, and in some cases also by nationality and address.

This has advantages above all for the joint-stock companies, because they can get a picture of the share holders and do not run the risk of being taken over by an anonymous large investor. https://online-exness.com/payment-methods/ trading is very popular in Asia. In Europe, bearer shares are most common, while in the USA registered shares are the most common form of securities.