12 May 2016 By PDSNET

A part-ownership of a company. The ownership of companies is divided into individual shares which, if the company is listed on the JSE, can be bought and sold by members of the public through a stockbroker. Companies issue and sell shares to raise the capital they need to start or build their businesses. This is done in the "primary market". Thereafter, the shares can be bought and sold between members of the public in the "secondary market". There are many different types of shares like preference shares, N-shares, non-voting shares, and so on - but the most common and interesting type are "ordinary" or "equity" shares - because they participate in the risks and the returns of the business. Companies can issue new shares, consolidate their shares, split their shares and use their shares to buy other companies. If you own shares in a company then you are entitled to receive your share of whatever dividends the directors declare. Some important statistics on companies are given "per share" such as the net asset value per share (NAV) or the earnings per share (EPS), so it is important to know how many shares a company has in issue on average during the year at the end of its financial year. Many types of changes can be made to the number of shares in issue during the financial year.

Share this glossary term: