What are examples of a public company
It is not uncommon for companies to face the challenge of growing and opening up new markets. However, this requires a lot of capital, which in many cases cannot be raised from one's own resources. There are basically two options for tapping new sources of capital: borrowing capital (from banks) or looking for people or institutions who are willing to take on risk and want to participate in the company. However, banks are not prepared to take on risk, but want their money back, including interest, in the following years. If the financial requirement is smaller, the search for individual additional partners, for example a limited partner or "silent partner", will therefore be the better way of raising capital. However, if a lot of capital is required, then it makes sense to get as many people as possible to invest in the company with small amounts. The stock corporation (AG) provides the legal framework for this. Joint stock companies often emerge from the restructuring of existing companies.
The stock corporation is a trading company (corporation) with its own legal personality, the share capital of which is divided into shares. The shareholders of the AG (shareholders) are not personally liable for the liabilities of the company. A disadvantage of the AG is that a high formal effort is necessary for the establishment. Therefore, this legal form is mainly found in large companies. In purely theoretical terms, after the establishment of an AG, previous entrepreneurs have to deal with thousands of shareholders who can have a say in important decisions. However, they can protect themselves against losing control. All you have to do is ensure that you keep 51 percent of the shares in your possession. Then they have a majority in the general meeting and can elect the supervisory board that represents their interests. But you can also be elected to the board yourself. The small shareholders usually do not have much influence. However, you can ask the management board and the supervisory board unpleasant questions at the general meeting.
Foundation of the stock corporation
In order to found an AG, one evaluates the share capital (company assets) and divides it into any number of parts. This is followed by an invitation to as many interested parties as possible who are to participate in the company by buying shares (company shares). The founders of the company take over all shares against their contributions. Then they draw up the articles of association and the articles of association, which must be notarized. This is followed by the appointment of the supervisory board and the auditor. The newly appointed supervisory board appoints the management board by resolution with a simple majority. This is followed by the formation report and finally the entry in the commercial register, which creates the stock corporation. Until the successful establishment, the entrepreneurs form a GbR. That means any entrepreneur can do business on behalf of society. Every entrepreneur is also personally and severally liable. A share capital of 50,000 euros is required to set up an AG in Germany.
Share capital and nominal value
The share capital is that part of the equity that results from the nominal value of all shares and is to be shown in the balance sheet as "subscribed capital". The nominal value is the amount stated in the share. In principle, shares may not be issued below their nominal value. As a rule, they are sold above face value, i.e. with a premium (agio).
Joint stock company - advantages for the company and for the shareholders
The shareholders of a stock corporation enjoy the advantage of being able to benefit from the opportunities of a large company, which is already possible with very small amounts. This means that you can be there for as little as 100 euros or less and that the risk as a co-company is limited. But the company also has advantages by founding an AG, because the many co-entrepreneurs generate capital that is not made available via loans and the associated obligations.
The underlying security (share) of an AG
Shares certify the participation in a company. The so-called nominal value is noted on the security, which is calculated by dividing the share capital by the number of shares. An issue price is set for the shares. Thereafter, investors are sought who want to pay this price for the acquisition of the share. However, it is not always easy to determine the issue price. If you set it too high, you may not be able to sell the shares. If the issue price is chosen too low, you can find many buyers, but in the end you may have given away a lot of money.
Organs of the public limited company
The AG consists of several organs: the general meeting, the supervisory board and the executive board. The general meeting is an annual meeting at which shareholders can exercise their voting rights. Because the shareholders are partners in the company and therefore have rights and obligations. For example, if a shareholder has 100 shares, he has 100 votes. The general meeting elects the supervisory board, which controls the management board. The management board represents the company externally and is determined by the supervisory board.
What do the shareholders of an AG hope for?
Firstly, shareholders hope for the highest possible dividend; this is a share of the company's annual profit to which they are entitled. They also hope that the share price will rise. With a little skill and a little luck, shareholders can make a lot of money selling their shares, as the price gains can be enormous. However, the coin has two sides: If the stock corporation generates losses, the value of the share usually suffers as well. Even events that have nothing to do with the company itself can cause the share price to fall rapidly - for example poor economic forecasts or political crises. If the company goes bankrupt, the security sinks into the abyss, which can also happen to large companies. If the corporation is bankrupt, the company's securities are only worth the paper on which they are printed.
Joint stock company, the most important things at a glance
- Shareholders can participate in companies with small amounts
- Shareholders have a right to dividends
- Shareholders can hope for price gains
- Shares can easily be sold again
- Shares can lose value (price loss)
- Raising capital possible without fixed repayment installments
Also read …
the articles on corporation tax, the managing director and the GmbH in the encyclopedia.
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