Firstly, being a co-owner of the company means you have the following rights, whatever the number of shares you own:
· the right to dividend payment: in proportion to the amount of shares you own, you have the right to receive a portion of the company’s profit every year – provided that the company has made a profit and decides to distribute all or some of the profit to their shareholders. That’s not always the case.
· the right to vote: except in extraordinary circumstances, any person who owns at least one share of the company can attend the annual general meeting of that company and express their opinion on the management team.
· the right to information: if the company is listed on the stock exchange, you have the right to receive certain kinds of information (about its financial situation, its politics, etc.)
Another advantage of shareholding is that shares can increase in value over time according to the rules of supply and demand. For a company quoted on the stock exchange, the share price of its capital stock will evolve according to the sales and purchases of investors. In theory, the share price on the stock exchange increases in proportion to the company’s profits. Investors anticipate higher profits and decide to buy shares. Demand outstrips supply and the share price increases. On the contrary, if the financial results are lower than expected, there are too many shareholders looking to sell and the share price decreases. In practice, it is more complicated than that because external factors such as economic circumstances, the level of interest rates, the financial results of a competitor, etc. can affect share prices.