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Home Money How to Become a Shareholder in a Company

How to Become a Shareholder in a Company

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A shareholder is an individual or a company owning at least one share in an organization’s capital stock. Shareholders are the owners of the company and acquire the accomplishment of a company as there is increased stock valuation. At the same time, the shareholder has to bear the losses, if the price drops of the company stock. If you want to become a shareholder, there are ways to know how to become a shareholder in a company.

Related Post: Shareholders vs directors: who are they?

How to become a shareholder in a company?

How to become a shareholder in a company

The stock of a company represents the ownership interest in the company. The stock market includes ups and downs. Becoming a shareholder means buying the stock of a company using a brokerage firm. In a private corporation, you can become a shareholder by directly contacting the company with and an investing offer.

Buying Brokerage Firms Stocks

Brokerage firms sell and buy stocks in association with other financial instruments. There are different levels to know how to become a shareholder in a company.

  • Online brokerage firms allow you to sell and buy at a flat fee a stock. They charge a transaction fee of $3.95/transaction.
  • Full-service brokers are charging up to 5%/transaction. The benefit of a full-service broker is that the broker offers you valuable information about the stock and its project performance. It is ideal for new investors. A full-service broker can ensure you become a shareholder.

Also Read: Things to Know and Do before Investing in stocks

Making Purchase

You can buy stocks. It may be through an online brokerage platform or broker. New accounts need a minimum balance to ascertain you pay before purchase. Thus, determine your budget and review the stock price. You can place an order, and limit orders at a specific price.

Investing in Private Companies

Buying shares of private companies is different. Private companies are owned by a group of investors and a few owners. These private corporations have ledger-maintained stock management. So, if you wish to buy stock into the company, negotiate per share price and the number of shares. Your owners may hesitate to give shareholder control, and so may limit the share numbers you can buy.

However, on establishing the number of shares and their value, you can remit payment and acquire a stock certificate. Thus, become a shareholder of the private company.

Who can become a shareholder?

Who can become a shareholder

Shareholders are known as the members of a company. Any person means an individual, an association, a body corporate, or a company can become a shareholder. Here you can know who can become or is eligible to become a shareholder in a company.

Minor

A minor has no legal ability. However, his guardian, his parents, can enter and authorize on his behalf. They can buy a share on behalf of the minor and make him a shareholder.

HUF (Hindu Undivided Family)

A HUF is a person. Shares of a company are registered as Karta and so HUF can become a company shareholder.

Also Read: Need and Importance of Female Entrepreneurs

Company

A company can get a passing of resolution from another company Board of Directors, and approval to become a shareholder.

Partnership Firm

A firm does not have a legal entity, or it is not an individual. Yet a partnership firm has a collective name of individuals who are into the partnership as members. Thus, a partnership firm partners can become joint shareholders. Their names will get into the shareholder’s register of a company. Even the firm can become a company shareholder if they are registered.

Trust

Becoming a shareholder is possible if the shares are the trust’s name or in the names of the trustees.

Others

  • A foreign national (NRI)can become a shareholder in a company in India.
  • A Central or Stare government can become a shareholder in a company
  • An LLP can become a shareholder in a company. By agreeing to the MOA and purchasing shares of the company.

Knowing how to become a shareholder in a company helps people and companies in investing and becoming shareholders.

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