1) A company or a business corporation is operated by individuals.
2) Its shares of ownership are presented by stock certificates.
3) A person who owns a stock certificate is called a stockholder (shareholder).
4) The basic rights of the shareholders are:
a) To attend the general meeting hold annually at which financial statements and directors’ reports are considered.
b) To vote for directors and thereby to be represented in the management of the business.
c) To share in profits by receiving dividends.
d) To share in the distribution of assets if the company is liquidated.
5) The term “shareholder’s funds” is synonymous with the term “owner’s equity”.
6) The capital of a company is equal to the excess of assets over the liabilities.
7) There are two main types of the corporate capital:
a) the capital accumulated through profitable operations
b) the capital contributed by the shareholders.
8) The other types of capital include retained earnings, authorized capital and issued capital.
The main notions of “a shareholder” and “shareholder’s funds” are disclosed in the text. The basic rights of the shareholders are enumerated. The classification of the corporate capital into various types is described.
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