The capital stock is the money paid in the beginning of the project by the owner in a small business, or the owners and shareholders in bigger business. The stock is not considered within the assets and properties of the business, as the stock is constant while the properties and assets vary in the value and quatity according to different factors. There are two kinds of capital stocks: the stocks and bonds.
The first type of capital stocks are stocks, the stocks is part of the capital stock that has to be determined before starting the business, as the invested money in the business must be divided to equal shares, the share holders are then considered a part of the business owners, and they gain some of the profits due to that respect.
The shareholder is a person or a company that owns shares or even one share in a stock company. Shareholders gain some profits according to the number of their shares. There are two kinds of share holders according to their type of stock, common stock or preferred stock.
Common Stock is the security given from the corporation to the share holders, the shareholders control the corporation through electing the board meeting, also they vote on the corporate policies. In case of the loss of the corporation and liquidation, the common stock share holders come at the end of priority in collecting their money after the bond holders then the preferred shareholders.
Preferred stock is the security given from the corporation to the shareholders. Onin contrary of the common stock the shareholders don’t have any voting rights but they have a big advantage on the common stock as they have higher priority than the common stock in case of liquidation.
Second type of the capital stocks are bonds, as they are considered a sort of debts so they have the first priority in case of liquidation. The bonds are debts security given by the company to the bond holder in return of the money they put as bonds and they get their money back with interest in regular payments in specified time.
The bondholder does not have any control on the company and the bond holder can’t be considered an owner of the company as the share holder, is considered a lender.
Bonds can be issued by government, companies or international institutions. The beneficiaries could be individuals, companies or banks.
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