Rights and duties of a shareholder

Anyone who buys shares in a company is a shareholder. By purchasing a share, the shareholder has acquired certain rights.

•     Voting rights at general meetings (depending on the type of issue of the share).
•     Shareholders can have a say in the further development or investments of the public limited company.
•     Right to dividend payment by the public limited company
•     The public limited company is obliged to pay a dividend. The shareholder can also waive this right.
•     Right to information on the company's situation and development
•     The public limited company must always provide its shareholders with detailed information on how the company is developing and what its financial situation is.

The duties of shareholders are quickly listed. For example, shareholders must pay for the company shares they have purchased. Furthermore, as shareholders they may not do anything that could harm the public limited company.

Advantages and disadvantages

Advantages 

• Wide range of investment opportunities 
• High interest possible 
• Possible for private individuals  

Disadvantages

• Only tradable on the stock exchange
• Only recommended with specialist knowledge
• High risk of loss

Beginners in share trading should initially focus on a few stocks or invest in funds. It makes less sense to focus on just one share. Stock trading in https://trade-exness.com/mt4/ is recommended for consumers who can do without capital over a longer period of time.

How do you buy shares?

Shares are purchased through a share deposit account. Consumers can open such a deposit account with their house bank or another bank. As a rule, share deposits can be held online.

To buy shares, the securities identification number (WKN), place of trading, quantity of shares and limit are required after opening the securities account. Online brokers, for example, can provide support when buying shares. They take over share trading on behalf of a client.  You have to plan for fees for both the securities account and the broker.

Types of shares

Ordinary shares Ordinary shares are securities whose holders have full voting rights at general meetings.

Preference shares  

With this type of share, the holders enjoy the benefits of a higher dividend. In exchange, they usually give up their voting rights at shareholder meetings.

Bearer shares  

With a bearer share, the rights of the holder, such as the entitlement to a dividend or voting rights, are linked exclusively to the purchase of the share and not to a name. The advantage of bearer shares is therefore that they can be easily transferred.

Registered shares  

In the case of registered shares, the holder of the share must be entered in the share register to be considered a shareholder.

Registered share with restricted transferability  

In the case of registered shares with restricted transferability, the holder of the share must be recorded in the share register. In the case of a transfer of registered shares with restricted transferability, the other shareholders must consent.

Par value shares (nominal value shares)  

Par value shares or also nominal value shares have a fixed value, called nominal value. The share capital of a public limited company is made up of the number of issued par value shares. According to § 8, paragraph 2 of the Stock Corporation Act, the nominal value of a share must be at least one euro.

No-par shares (quota share)  

In contrast to the par value share, a no-par share has no fixed value, but the share capital is distributed proportionately among the no-par shares. According to § 8, paragraph 3 of the Companies Act, no-par shares may not be worth less than one euro. If the value is less than this, they are null and void.

Composite shares

In the case of a compound share, the holders receive voting and dividend rights from companies whose registered office and tax domicile are separate.

New shares  

New shares are shares that are newly issued as part of a capital increase. Holders of older shares in the company have a preferential right. If they do not exercise this right, the new shares are traded on the stock exchange. As soon as the new shares earn the same dividends as the old shares, they are no longer treated separately in stock exchange trading.

Old shares  

As soon as a public limited company issues new shares, the existing shares become "old shares" because their dividend rights are higher. Companies can issue different types of shares to shareholders and control the share issue in terms of voting rights or company share. Mixed forms of shares are also possible.