Stock (or share) – is a registered investment security that signifies ownership in a company, represents a claim on part of the company’s assets and earnings, entitles the owner to participate in the management of the company and receive remaining assets relative to the amount of share in the charter upon liquidation of the company.
There are two main types of stocks:
- Common stock
- Preferred stock
Common stock is a security that entitles its owner to vote at shareholders’ meetings and to receive dividends from issuer’s earnings.
Preferred stock is a type of share that guarantees its owner to receive dividends based on stable interest of the stock’s book value regardless of issuer’s operation results. Preferred stockholders generally do not have voting rights.
Shares have nominal (par or face value) and market value. The par value of the shares shall be determined by the charter of the company, while the market value varies depending on securities market’s conditions.
According to the Law of the Republic of Azerbaijan “On Securities Market”, the par value of the stocks shall be expressed in national currency.