We explain what an action is and the types of actions that exist. In addition, what the common actions consist of.
What is an action?
In the financial environment, a title issued by a given company is known as an action, and that is equivalent to the monetary value of one (1) of the equal parts in which the share capital is fragmented of the company.
That is to say: the actions are investment documents that assign to the holder the ownership of a portion of the share capital, which will be greater as soon as more shares he has. The holders of these titles are known as shareholders .
Commonly, the shareholders of a company enjoy political rights (vote at the shareholders' meetings to decide business conduct), and economic rights (receive benefits from the company and eventually earn profits in relation to the amount of titles they handle).
However, as the actions are usually freely transferable, there are usually majority and minority shareholders, the former always with greater decision-making power when handling larger portions of corporate social capital.
The return of the shares, that is, the money they generate to their holder, is usually considered an investment in equities, that is, that lacks a fixed payment determined by contract in advance, but varies according to the performance of the company and, obviously, to the amount of actions taken. But all the shareholders of a successful company receive economic benefits from it.
The purchase and sale price of an action depends on the company's financial situation at the time of the transaction. In many cases, the purchase of cheap actions and their subsequent more expensive sale is an indicator of good commercial performance, so the possession of these forms part of the active goods. of each investor . This value has different mechanisms to quantify and be assigned, as is the case in stock market indexes (the stock market).
Types of actions
There are the following types of actions:
- Common or ordinary . They give the holder participation in the corporate assets and the right to speak and vote in the company's corporate meetings.
- Preferred Stocks with a generally fixed dividend rate, with preference to pay above the common ones, for various financial reasons.
- Limited vote They grant the holder the right to vote only in certain business matters, in return they are usually preferred or yield a dividend higher than the common shares.
- Convertibles Those actions that can be converted into bonds (although the usual thing is to happen in reverse).
- Of industry Instead of providing capital to the company, the holders provide services or a specific job and receive shares in return from it.
- Released . Those that do not require payment by the holder, since they are the payment of benefits or utilities that he should have received.
Common shares are, above all, financial assets. They lack an expiration date, are fully negotiable and represent a small portion of the company's property.
Its issuance usually responds to urgent financing needs, but it is the most expensive way to raise funds, since the returns generated in the future should allocate a part to the benefit of the shareholders.
On the other hand, selling shares means losing the autonomy of the company in some way, as shareholders usually gain voice and vote in decision making.
The shareholders also have a limited responsibility in the company, that is to say, that their personal assets will not be at risk before the company's performance nor will they automatically be part of the company's total assets.
Thus, a common shareholder may not lose more than his financial contribution to the company (equivalent to a defined number of shares purchased, for example).