Company under the eyes of the law is considered as a separate legal entity. The formation of the company is a process that firstly starts off with an idea. A company aims to provide goods and services to the society with a motive to earn profit. With the passage of time there have been countless number of companies all across the world that have been providing goods and services to billions of satisfied consumers all across. It is very important for the person while forming a company to be familiar with the features of the company. The shares of the company are the unit of account for various financial institution instruments including stocks, mutual funds etc. in simpler terms the shares or the stock is a document issued by the company that entitles the holder to be one of the owners of the company.
There are two main types of shares. These include the equity shares and the preference shares. The preference shares are the part of the company that must fulfill certain conditions. That is in the event of the payment of dividend the preference shares carry the preferential rights over the equity shares in the payment of fixed amount of dividend. The preference shareholders do not possess the voting rights. The equity shareholders however enjoy the voting rights in the company. The equity shareholders are the real owners of the company.
They hold the company equity and take all the important decision.
It is very important for the former of the company to hold the company's equity. Every person has certain well defined goals to achieve for which he forms a company. It is very important for the person to hold the rights to take the decision within the company. For this he needs to hold the rights and the authority regarding the decision making within the firm. The company that has well defined objectives and sound finances along with good quality of members and workers is bound to succeed. The company is an artificial person within the eyes of the law. The owner of the company might die but the company stays alive under the eyes of the law.
Hence it is important for the company to have a well established base in order to have a certainty of the positive future ahead. The company works within the society and as a part of the society. Hence it is important for the company to keep in mind the welfare of the people in the society. Therefore the company equity plays a very crucial role. This is because it is the owner of the company who holds the equity. He is the one who would be able to keep the company at the right path and can coordinate of others to achieve common goals.
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