Have you heard about company shares and don’t what it’s all about? Don’t worry, you’re not alone! Many clients or readers have been asking me what shares are or how they work. Many people get confuse just like some of you reading this now. Before you finish reading this, you will discover what they are, how they work, their benefits and many other interesting things.
The capital of a company is divided into small units of a finite number known as shares. Shares are units of ownership in any organization, institution, or company. Simply put, a share is a percentage of ownership of a company. When someone or an entity buys shares in a company, they become one of the owners.
As said above, when you buy a share in the company, you are buying a fraction or percentage of the company. This fraction may gain you voting rights, pay dividends as well as gives you ownership and decision-making rights.
Shares do come with risks and benefits. The main risk may be capital loss and no dividends. Dividends are cash distributions of profits made by the company. The owner, who is known as shareholder, has the right to benefit from the company’s profits if a dividend payment has to be made.
Companies sell or issue shares in order to raise funds. Shareholders have the right to receive future dividends, be it on a regular basis or as decided by the shareholders. See these easy methods of raising funds for your business.
Those who own shares in a company choose who runs the company. They are also involved in key decision-making in the business. They also have voting rights in the company.
In Cameroon, you can own the entire (100%) shares of a company or together with others, you can pool your money to carry out a collective investment. A company with shares owned by one person is called a sole or single company.
Shares are simply divided-up units of the value of a company. For instance, if a company’s shares is worth 10 million, and there are 2000 shares, then each share is worth 5000FCFA.
These are shares approved by the company founders or board of directors when filing their corporate paperwork. In Cameroon, the minimum authorized shares for private limited company is XAF100,000, while that of a public limited company is XAF10,000,000.
These are the number of shares the owners of the company decide to sell in exchange for cash. This may be less than the number of authorized shares.
Before you buy shares in a company, make sure you understand the difference between a private and public limited company. Private companies sell their shares in private while public companies sell all or a part of their shares in public through an initial public offering (usually in the stock exchange).
You need to first of all choose the business structure, find a location, get and register a business name and apply for a business license and other permits. Checkout these 9 benefits of a private limited company if you may want to choose it as your preferred business structure.
Do you need more information about company incorporation in Cameroon? Checkout the requirements to incorporate a company in Cameroon.
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This content has been prepared for information purposes only. It is not intended to provide, and should not be relied on for, tax, accounting or legal advice. You need to consult your own tax, accounting or legal advisors before engaging in any transaction.