You all must have definitely heard about company shares. But, have you wondered about the top features that actually lead a company share to be the way it is at the moment. Well, keep reading ahead to find out the top features of company shares.
- Permanent capital: The most important feature as well advantage of a company share is that ensures that you company gets fixed capital. This means that the amount may not be the same always, however, it is permanent. This can be used by the financial manager of your company at any time. This is very useful in situations when there is crisis. In fact, you do not need to refund the amount either. The shareholders may get their capital only in case the company is liquidated.
- No obligation to pay dividends: This is nothing less than another redeeming element of company shares. There is no involvement of a charge or the mandatory rule that you will have to pay the dividends. It is totally up to the management team as to how they wish to use their resources. They are free to spend it or invest it. The shareholders have no right to speak in between or direct any orders.
- No security: As you just read, share capital is very important. Just like a country has a national reserve, a company also has its reserve in the sense of the share capital. Thus, many of you may be thinking that in order to get your hands on the share capital, you will need to present a security or guarantee. But, you are totally mistaken. In case you wish to obtain the share capital, you do not need any kind of mortgage. In fact, you not even need to put a part of your company assets at stake.
- No obligation to refund capital: Well, if you have been reading this article with utmost attention and also understanding each and every word stated till then, then it must be pretty clear by this point that you or your company are not under any obligation to return the capital to the investors during the lifetime of the company. However, in case there is liquidation, then the shareholders may definitely have the right to get it back.
- Residual claims to income and property: Last but not the least, you must know that the shareholders are eligible to get their claims on the income only after the debtors have received their fair share. The priority is first to meet the needs of the creditors. In case of liquidation of the company, the creditors are still the firm ones to get their share of the property. After this, if something is left behind, then that goes into the kitty of the shareholders who will distribute it amongst themselves.
Now, you know the top 5 features of company shares. This will help you in case you wish to have your our business and start up something, or even when you just need to know about how to manage your company funds.