Who Issues Stocks and Why?

Share: On dividing a company’s capital into equal parts into different pieces, those all equally divided parts are called as Shares.

Share is a part of the total capital of the company and the decision to split the capital into shares is taken first by the company's management. The company decides to split its capital into shares itself.

When the company needs to expand its business, it requires a lot of capital, now the company has two solutions to meet its capital requirements –

1. To take a loan and pay interest on that loan.
2. Taking money in the form of capital from the people, investors and earning profits, and after that, giving part of the profit to people in that proportion.

In small businesses, most companies do their work by taking a loan from the bank, or from the private investor But for the big business the company, besides the bank, seeks money from the common people as a capital and instead gives their shares to them.

We all know that the common man does not have too much money so that only some two thousand or five thousand people together take shares of a company and they give the money as much money as possible for them. In this way, people get the chance of making a profit through small investment and the company get the capital to fulfill the company’s requirements.