According to digopaul, the stock as one of the classic securities is poorly defined as a fraction of the equity of a stock corporation (§§ 1 Paragraph 2, 29 AktG). It certifies the rights, but also the duties of the stockholder in the company. In addition to the classic stock corporation, limited partnerships based on stocks (KGaA) can also build up their stock capital in the form of stocks. Even if stock trading keeps the stock exchanges moving around the world, not every stock inevitably has to be approved for trading. In addition to trading on the stock exchange, there is also the option of acquiring stocks over the counter.
- There are the following types of stocks: ordinary stocks, preference stocks, bearer stocks, registered stocks, registered stocks with restricted transferability.
- If a stock corporation plans a capital increase by issuing new stocks, the existing stockholders have a right of first refusal.
- Both dividends and realized capital gains are subject to the withholding tax.
- Stocks traded on the stock exchange are quoted daily at a price that results from supply and demand.
The issue of stocks
If a company is to be founded as a stock corporation or converted into a stock corporation, there is a new issue, the first issue of the stocks. Further capital increases through renewed stock issues are referred to as issues. There are two ways to determine the number of stocks to be issued. Either the stock capital is divided by the number of stocks to be issued, resulting in the nominal value of the stock, or the stock capital is divided by the desired nominal value. The number of papers to be issued follows from this. The nominal value in Germany is usually 50 euros. There is no compelling reason that all stocks in a company should have the same face value. For example, half with a face value of 50 euros,
The different types of stocks
There is not only one variant of stocks, but on the one hand depending on the structure of the rights and on the other hand different forms based on the allocation.
The common stock
The common stock is the most common type. It includes both a voting right at the Annual General Meeting and a right to dividend payment, provided this is distributed.
The preferred stock
In contrast to ordinary stocks, the holder of the preference stock has no voting rights, but receives a higher dividend than the ordinary stock.
The bearer stock
A bearer stock is a nameless piece of paper that is assigned to the person who owns it.
In contrast to the bearer stock, the owner is recorded by name in the company’s stock register. If the unit certificates are sold, it must be deleted and the new holder entered.
Registered stocks with restricted transferability
Registered stocks with restricted transferability are the most complex when transferring to another stockholder. The sale requires the approval of the stock corporation. The spread is accordingly narrow.
The papers of a company that have been issued for a long time are called old stocks, while new stocks describe newly issued stock certificates as part of a capital increase.
The subscription right
If a stock corporation plans a capital increase by issuing new stocks, the existing stockholders have a right of first refusal. The number of subscription rights that are required to buy a new stock results from the relation between old stocks and the number of new stocks to be issued. Since in the rarest of cases the number of subscription rights of a stockholder corresponds to the number of subscription rights required to acquire a new stock, subscription rights can be traded. If, for example, ten subscription rights are required to purchase a new stock, but a stockholder only has eight, he can either sell them on the stock exchange or buy two more in order to exchange the ten existing stocks for one new stock.
There are two reasons for investors to invest in stocks. Either you want a long-term investment with steady growth in value and solid distributions or the speculative moment with regard to the short-term achievement of price gains is in the foreground. Long-term investors target the dividend payout. This is not guaranteed and is redefined every year depending on the operating result. Both dividends and realized capital gains are subject to the withholding tax.
The stock price
Stocks traded on the stock exchange are quoted daily at a price that results from supply and demand. However, the stock market price does not reflect the actual value of the company, but rather what investors expect of the future of the company and its future profits. In the high-tech and biotechnology sectors in particular, there are highly valued companies that are not yet paying dividends. Investors in these industries assume that one day the big hit will be successful and that there will be an above-average return. Time and again, investors fear the fluctuations in the price of a stock. The past has shown, however, that after each price slump, the previous price high was exceeded again. This is also demonstrated by the graphic “Stocks, Bills, Bonds & Inflation ”by the US analyst firm Ibbotson. Investors who invest in conservative stocks will find a form of investment here that offers excellent long-term protection against inflation and solid growth. As value stocks, stocks are almost entirely free of any loss of purchasing power.