What are Equities, shares and ownership?

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Today, let's learn about Equities, shares and ownership.

Most businesses have assets. For example, a retail business might have stores, a warehouse and a delivery van. If a business has a single owner, then it’s possible that they own all of the assets directly – they own the store, the warehouse and the delivery van.

However, most businesses, particularly large business have more than one owner. Now there is a problem – who owns the assets?

A solution to this problem is to incorporate a company and for the company to own the assets. Companies are legal entities and like people they are allowed, by law, to own assets and to enter into contracts.
Companies can be owned by more than one person. Ownership is divided into shares. Here the ownership interest is divided into ten equal shares. Each investor’s ownership interest is represented by the number of shares that they hold.

Our first investors have 2 out of the 10 shares. They own 20% of the company. The second investor owns 3 shares or 30% of the company and the third investor owns the remaining 5 shares or 50% of the company.
Forming a company allows for many investors to own a share of the same business.

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