# share

In 1809, Dillinger Hütte was one of the first German stock corporations, but here a share from 1906

The share ( English share ) is a security that certifies the share in a stock corporation or a limited partnership on shares .

## General

The share is a financing instrument for the corporations of the stock corporation (AG), partnership limited by shares (KGaA) or European company (SE). With it, they can legal forms equity ( share capital or limited partnership ) constituted by these shares on the stock market to shareholders sell . With the share, the shareholders receive a security that certifies various rights and obligations and for which the shareholder has to pay the market value in return . In particular, the holder of a share becomes a partner in the AG or KGaA, while the holder of corporate bonds acts as a creditor .

When a stock corporation is set up, it is determined how many shares the share capital is divided into. These shares can be present as global certificates or printed and issued as physical pieces. The issue of shares is called an issue . Another issue is also possible as part of a capital increase .

The proportion of a share in the company can be documented in the form of par value or no-par shares. For par value shares, the par value of the share corresponds to the amount printed on it. This is important because the share capital does not have to be divided equally over all shares. So z. B. a share capital of 100,000 euros can be divided into 1,000 shares of 50 euros each and 50 shares of 1,000 euros each. Shares with no par value (also quota shares or no-par shares ) do not have their own fixed par value, but correspond to their share in the share capital. With 1,000 shares and € 200,000 share capital, one share corresponds to 1/1000 or 0.1% of the share capital and thus of the company. The theoretical face value would be € 200 (1,000 (shares) × € 200 = € 200,000).

The book value of a share is calculated - since the book value of the company corresponds to the equity capital - as

${\ displaystyle {\ text {Book value per share}} = {\ frac {\ text {Equity}} {\ text {Number of shares}}}}$.

The market value of a stock corporation is calculated using the formula

${\ displaystyle {\ text {Market value}} = {\ text {Number of shares}} \ cdot {\ text {Market price}}}$.

The company can let the shareholders participate in the company's profits through dividends . The dividend is a payment made to the shareholder per share . The amount of the dividend is proposed by the management board (proposal for the appropriation of profits) and decided by the company's general meeting.

Like other securities , stocks must be protected against forgery. They are therefore in security printers made with different security features.

## etymology

The word share originated from 1472 in Bremen from the Middle Low German word “axie” for “claim” or “right”, which was derived from the term for the “claim” ( Latin actio ). The share is quoted in Bremen as follows: “van Antworpe in the zone not mede wesen unde up erer axien stande bliven wolden”. In 1598 it is quoted from Wijk bij Duurstede : “Just as a bond, bond or share buys someone ...” ( Dutch soo wie een rentebrieff, obligatie ofte actie van ymant coopt ) The Dutch East India Company issued shares for the first time in March 1603 ( Dutch actien in de compagnie ), with the Dutch word serving as a model for the German language. In the German-speaking countries, the term share in today's sense can be found for the first time in 1647 with the phrase "... this brandenburgischer compagnien actien ...", in 1651 the author spoke of the "sale of the actions". From Latin Today many languages derive their shares phrase from ( Italian azione , French action , Spanish acción ).

## history

The first share: stake in the Stora Kopparberg copper mine from 1288

The first share ever represented a share of 12.5% ​​in the Swedish copper mine "Stora Kopparbergs Bergslags Aktiebolag" in Falun, which was first mentioned in a document in June 1288 . In the contract concluded by the East India Company in September 1599, its founders undertook to raise a capital fund of £ 30,133, which was divided into 101 shares ( English company shares ). This was followed by the United East India Company (VOC), whose shares were first traded on March 3, 1603 between Jan Allertsz and Maria van Egmont. The company, which consists of six chambers ( Dutch kamers ), was the first in the world to issue shares to non-company shareholders. The first stock exchange came into being with the Amsterdam Stock Exchange ( Dutch Amsterdam beurs ) in 1612. It is considered to be the first stock exchange that enabled permanent stock trading in the 17th century . The stock exchanges did not function as floor exchanges from the start, because suppliers and buyers were represented by stock exchange traders , the standardized trading objects (shares) were stored elsewhere, the stock exchange prices were not negotiated between suppliers and buyers, but left this to the stockbrokers .

The first German stock corporation was established on March 17, 1682 with the “trading company on the coasts of Guinea” based on the model of the VOC and was intended to increase the prosperity of Brandenburg through overseas trade. She equipped the ships "Morian" and "Churprinz", which set sail for Africa in May 1682. The first German shares reached in 1785 on the Berlin Stock Exchange on the exchange list . Since it was founded on June 5, 1739, it initially only traded bills of exchange until the "Emdener Heringsfang-Company" - which had had a "Comptoir" ( branch ) in Berlin since 1785 - had its shares traded on the Berlin Stock Exchange. Further German stocks appeared on the Berlin stock exchange list after 1810, namely stocks in the "Zuckersiederey" (founded in 1749), "Seehandlungs-Societät" (October 1772), "Tabacks-Regie" (November 1808) and "Assekuranz-Societät". Railway shares were also added by 1850 . The introduction of shares on the Vienna Stock Exchange began in 1818 with the share of the Austrian National Bank . The number of shares there rose from eight in 1848 to 39 at the end of 1867.

The first “Law on Public Companies” came into force in November 1843 in Prussia . The stock exchanges in Germany experienced rapid market development during the early days with the industrial boom . Share trading was now also introduced by regional stock exchanges such as the Munich Stock Exchange (founded in December 1830), in March 1844 the Kölnische Zeitung reported the first share price of 131 ½ of the Cologne-Bonn Railways on the Cologne Stock Exchange , followed by the Stuttgart Stock Exchange (February 1861), Frankfurt Stock Exchange (share trading since 1871) or the Düsseldorf Stock Exchange (January 1875). During the founding period between 1871 and 1873, 928 joint-stock companies were established in Germany with a total capital of 2.78 billion Marks, and 107 joint-stock banks with a total capital of 740 billion Marks were founded in the same period. The founders' crash led to the first black Friday on May 9, 1873 and caused the share price to fall by half; Of the 107 joint stock banks, only 34 remained at the end of 1873. As a result, the government changed the Stock Corporation Act in July 1884 and wanted to keep small savers away from stocks with this amendment.

On-exchange securities trading in Germany ceased as part of the German banking crisis with the closure of the stock exchanges on September 21, 1931. After the Second World War, the Hamburg stock exchange resumed a “controlled open market” on July 9, 1945, and started here on March 11, 1952 also the official trade in shares. In countries with multiple stock markets, trading was heavily concentrated on one stock exchange, making it the main stock exchange. While the Paris stock exchange accounts for 95% of the French stock exchange turnover, the New York Stock Exchange achieves 80% of the turnover of all US stock exchanges. In Germany, too, the regional stock exchanges lost their importance; After the Second World War, the Frankfurt Stock Exchange developed into Germany's leading stock market, on which international stocks are also traded. Frankfurt accounts for around two thirds of all German stock exchange turnover, followed by Düsseldorf. Of the 10,700 companies whose shares were traded on the Frankfurt Stock Exchange in September 2014, just under 1,000 name Frankfurt as their home market, the rest are foreign shares.

In the second half of the 20th century, the development led to the fact that shareholders no longer owned the shares as individual documents for cost and security reasons, but instead had them administered by a bank in a custody account . Today, the custodian banks usually do not have any actual pieces, only the shares are administered. The so-called global or global certificate, in which the shares are securitized, is usually kept in a securities depository (in Germany, Clearstream Banking AG ). The no longer used effective shares were increasingly the object of scripophilia , the collecting of historical, worthless effective securities ( nonvaleurs ). These include ornately designed old stocks and bonds with an interest coupon as well as renewal coupons or talons .

## Market participants and market data

As market participants, there are shareholders , investors ( institutional investors or private investors ), issuers , credit institutions as well as stock market traders and brokers (today: lead brokers ) on the stock market . The trading motive of these market participants can be investments , services (banks with security orders from their customers ), arbitrage or speculation . Market transparency is created primarily through stock exchange prices and the publication of company data by issuers. The market mechanisms cause price formation through supply and demand, which comes about through the market participants. Typical market data are the stock exchange price, the dividend yield and the stock index . While the dividend yield can be compared with the market interest rate as a reference value , the share index reflects the price development and the price level of the shares.

## Legal issues

The share capital of the AG is divided into shares in accordance with Section 1 (2 ) AktG . The share is a security in which the rights and obligations of the shareholder are documented. The shareholder can delegate some of these rights to another person by proxy , for example if he cannot attend a general meeting in person. In principle, every share has one vote and is associated with full rights and obligations.

## Share classes

The modern corporate law leaves it up to the company to treat all shareholders equally (principle of single share issue) or different to different types of shareholders shares.

Differentiation according to voting rights:

Differentiation according to transferability:

• Bearer shares are the usual form of the share, which is made out to the respective holder and can be easily transferred.
• Registered shares are shares for which the shareholder is recorded in the company's share register , including
• Registered shares with restricted transferability as registered shares, which may only be transferred with the consent of the company.
Stock of a US company from 1968

Differentiation according to the time of issue: (is defined as follows when additional new shares are issued):

Differentiation according to company share:

Other: It is also legally possible to mix different forms of shares and, for example, to issue ordinary shares as registered shares with restricted transferability and at the same time to issue preference shares in the form of bearer shares.

If only new shares of a business area are to be issued, the tracking stock is ideal .

Furthermore, there is the interim note , which today is usually only referred to as a subscription right and is issued in place of the shares. After the final share has been issued, the interim receipt will be replaced by the share or the subscription right will expire.

There are also composite share as special constructions which evidence a number of companies in a stock, as well as funds from equities of various companies.

## Share issue

The issue (also issue ) of new shares is referred to as a share issue . The company that issues the shares is also called the issuer in the issuing process . The creation of new shares is possible in the following situations:

The new shares can be placed on the primary market to a wide audience . This is usually done through the mediation of an investment bank , which receives a percentage of the issue proceeds for its services.

There are various methods of determining prices : fixed price methods , auction methods (American and Dutch) and the bookbuilding method.

In the case of a stock split, for example, the shareholder receives two new shares for one old share, whereby the total value does not change. This is used as a market instrument, for example, to facilitate trading in the stock. Anyone who previously only had one share can then sell part of it, so to speak, but otherwise retain all rights as a shareholder.

According to § 9 AktG it is not permitted to sell shares below par , i. H. to issue at a price lower than the nominal value (nominal value share) or the proportion of the share capital attributable to the individual no-par value share (no-par value share). Output above par is permitted and is the normal case in practice.

## Number of shares

The number of authorized shares is the maximum number of shares of a stock corporation that may be issued by the management board. A fraction of this is the number of shares issued, also the number of shares issued. Of these, the stock corporation can hold its own shares , the number of shares it holds itself, including the number of its own shares. This leaves the number of shares in free circulation. The number of shares in free circulation is used, for example, in a share index to calculate market capitalization . In Germany, the stock corporation has to comply with various publication obligations in accordance with the Securities Trading Act and publish certain changes in the stock portfolio . This includes in particular the purchase and sale of shares by members of the executive board or supervisory board.

The number of shares can be changed through stock consolidation or split , whereby the total capital is retained.

## Economic importance

During the founding period , the stock corporation advanced to become the most important legal form in industry , banking and insurance . The French economist Léon Walras described price formation in the Walras Law in 1898 using the example of the stock market, to which he assumed the tendency towards market equilibrium . In contrast, share prices arise according to the General Theory of Employment, Interest and Money by the economist John Maynard Keynes , published in February 1936, through “conventions”, i.e. a common valuation of market participants, which is mostly clearly influenced by moods . Although he considered these environmental conditions to be stable, he only saw stability as given if there were predominantly market participants who used their better level of information to maintain a stable price equilibrium on the stock market. Keynes' skeptical stance on the stock markets is expressed in particular by the fact that he classified the separation between owner and management and the permanent price fixing as destabilizing. The stock exchange price today reflects the market equilibrium through which the market is cleared .

Stocks are suitable for large companies and small and medium-sized companies with high capital requirements . Shares cover - at least partially - the capital requirement for equity capital of the company , because the investors the shares of a business start-up or capital gain. By issuing shares, companies can partially finance their investments . Stocks are subject to a resource allocation in stock markets in that stock prices emit signals about ownership of stocks and ideally reflect all available information . The stock market enables economic growth because the company financing is partly taken over by shareholders and these capacity expansions are co-financed through start-up or expansion investments.

The market volume of shares in circulation worldwide was in 2015 a total of 146.5 trillion US dollars market value . Was accounted for by North and South America a share of around 18%, followed by Asia / Pacific (14%) and Europe / Africa / Middle East (6%). The market volume ( nominal values ) on the German stock market had a volume of 1.5 trillion euros in 2014, while the bond market with a volume of 3.1 trillion euros was twice as large as the stock market. In 1996 there were 3.75 million direct shareholders in Germany, the number of which had almost doubled to 6.21 million by the year 2000 and then fell continuously to a low of 3.55 million in 2008. After that, the number of shareholders fluctuated with a slightly increasing tendency; in 2016 there were 4.38 million direct shareholders.

## Switzerland

The certain capital of a stock corporation (according to the Code of Obligations , title twenty-sixth) is broken down into partial sums, for whose liability only the company's assets are liable.

The share itself is explained in Article 622 ff. Of the OR as follows:

Art. 622
1. The shares are made out in the name or in the name of the bearer.
2. Both types of shares can coexist in a ratio determined by the Articles of Association.
3. The articles of association can stipulate that registered shares should or may later be converted into bearer shares or bearer shares into registered shares.
4. The nominal value of the share must be at least 1 centime.
5. The shares must be signed by at least one member of the Board of Directors. The company can stipulate that shares that are issued in large numbers must be accompanied by at least one signature.
Art. 623
1. The General Meeting is authorized to divide the shares into shares with a lower nominal value or to merge them into shares with a higher nominal value by changing the articles of association.
2. The consolidation of shares requires the approval of the shareholder.
Art. 624
1. The shares may only be issued at their nominal value or in an amount in excess of this. The issue of new shares to replace those that have failed is reserved.

## Situation in other countries

The public limited company (plc) is the usual form of company for larger, often listed stock corporations in many Anglo-Saxon countries. The corporation in the United States and the plc have a lot in common: The individual shares are called “shares” and can be publicly traded on the stock exchange.

## Web links

Commons : Shares from around the world  - collection of images, videos and audio files
Commons : Deutsche Aktien-Galerie  - Album with pictures, videos and audio files
Wiktionary: share  - explanations of meanings, word origins, synonyms, translations
Wikiquote: Share  - Quotes

## Individual evidence

1. Gerhard Köbler: Etymological Legal Dictionary , 1995, p. 10
2. ^ Verein für Hansische Geschichte (Ed.), Hansisches Urkundenbuch , 1876–1916, Volume X, p. 64
3. share . In: Prussian Academy of Sciences (Hrsg.): German legal dictionary . tape 1 , issue 3 (edited by Eberhard von Künßberg ). Hermann Böhlaus successor, Weimar, Sp. 473–474 ( adw.uni-heidelberg.de - publication date between 1914 and 1930).
4. ^ Richard Schück , Brandenburg-Prussia Colonial Policy under the Great Elector and his successors 1647–1721. Volume II, 1899, p. 3
5. ^
6. Ulrike Köbler, Werden, Wandel und Wesen des German private law vocabulary , 2010, p. 580
7. Heinz Duthel, Basel I, II, III - Capital - Credit Risk / Lending , 2013, p. 59
8. Ralf Mehr, Societas and universitas , 2008, p. 315
9. Lodewijk Petram, The World's First Stock Exchange , 2011, p. 16
10. Pravir Malik, Redesigning the Stock Market , 2011, o. P.
11. Hans Hauptmann, Das Bankgeschäft: A practical guide for banking and goods transactions , 1892, p. 5
12. Georg Buss, Berliner Börse from 1685-1913: On the 50th anniversary of the first meeting in the new house , 1913, p. 104
13. Kurt Bösselmann, The Development of the German Stock Corporation in the 19th Century , 1939, p. 29 f.
14. Thorsten Beckers, European financial centers in competition , 2006, p. 99
15. Christian E. Elger / Friedhelm Schwarz, Neurofinance: How Trust, Fear and Greed Make Decisions , 2009, p. 21
16. Gabler Bank-Lexikon, 1988, Sp. 855 f.
17. Gerhard Scherrer, accounting according to the new HGB , 2011, p. 208
18. BGH, judgment of February 16, 1976, Az .: II ZR 61/74 = WM 1976, 449, 450
19. ^ BGH, judgment of March 20, 1995, Az .: II ZR 205/94 = BGHZ 129, 136
20. BGH, judgment of February 1, 1988, Az .: II ZR 75/87 = BGHZ 103, 184
21. Business register - official platform of the Federal Ministry of Justice
22. Léon Walras, Études d'économie politique appliquée , 1936, p. 463
23. ^ A b John Maynard Keynes: The General Theory of Employment, Interest and Money. 1936, pp. 152-158.
24. ^ Eugene F. Fama, Efficient Capital Markets: A Review of Theory and Empirical Work , in: Journal of Finance vol. 25, 1970, p. 383
25. Number of direct shareholders in Germany from 1996 to 2016 (in millions). In: Statista the statistics portal. February 2017, accessed February 1, 2018 .