The global market, transnational companies and the banking system offer the possibility of selling or buying shares and holdings to interested parties. However, we live in a society that is unaware of these terms; we hear them every day but are unable to detect or explain what they are.

In this article we will see just what is the difference between shares and participations .

The differences between shares and holdings

In the general framework of globalization and finance associated with the stock market listing , in which money flows and the economy has more and more ways to transform reality, organizations can issue shares and participations to finance themselves. Let us see how they work and what their differences are.

What are shares?

The shares in a company are the parts into which the initial capital of a company is divided. In other words, if the capital of 300,000 euros is paid in by ten people, they are worth 30,000 each. In this way, individuals who contribute liquid for an economic activity will be called shareholders.

These shareholders are the ones who will have a decisive vote on the measures taken by the company, the strategy to be followed, the organizational model or the infrastructure it may have. In addition, the shares are those that enhance the growth of that capital. The more money we have, the more movement we can have in the financial market .

The shares are those that give direct benefit to their owners, always according to the profits or losses that can be had. These shares can also be sold at a different price from what was purchased. This means that if we provide, for example, 300 euros in shares and the price of that share is rising, it can be sold for 500 euros, if necessary.

In short, actions determine the power of influence that one has over the society that has been created, and this influence is measured in percentages that will determine the degree of importance or weight that our voice can have in the organization . Capital is transformed into influence in decision making depending on the percentage of those issued by the entity.

The holdings

And what are shares in the economy? In this case participations are clearly different from something with shares : one does not have the power to influence any type of executive, administrative or economic decision on the activity in the company or organization where these attributes are held.

Simply, the taxpayer contributes a certain amount , within the deadlines agreed between the company and the participant. The holder of the shares will benefit from an annual sum of money that will compensate his investment. Irrespective of whether the enterprise in question turns out to be profit or loss, the remuneration of the shares will be fixed and annual. A balance sheet will be drawn up at the end of the financial year after 12 months.

Another distinguishing feature between shares and holdings is that the latter are, at first, perpetual in nature. That is, you have to negotiate with the manager or CEO of the company if you want to terminate a contract of shares, and both parties must be in mutual consent.

Who can be a shareholder or have an interest?

Very often it tends to be thought that only the expert minds in economics have the opportunity to develop an activity of such caliber. However, any person or individual of a legal nature has the right to obtain shares or be an occasional shareholder . It is recommended, for the user’s peace of mind, to consult and be correctly informed for a business practice.

According to the latest reports and research by economists and professors specializing in the stock market, there is a disturbing legal ignorance among people entering the world of finance. Their rights are often ignored, given the complexity and degree of interpretation attached to the conditions on holdings and shares.

Bibliographic references:

  • Becker, Gary S. (1976). The Economic Approach to Human Behavior.
  • Economics, second edition (2009), with Robin Wells.
  • Friedman, David D. (2002). “Crime,” The Concise Encyclopedia of Economics.