Why do companies issue shares? - ProProfs Discuss
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Why do companies issue shares?

Why do companies issue shares?

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Asked by H.Donna, Last updated: Jan 14, 2022

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B. Denton

B. Denton

Who wants to travel all the world and capture all the moment in his camera.

B. Denton
B. Denton, Traveler, journalism, Greater Manchester

Answered Nov 01, 2019

Companies usually issue shares because they want to make sure that they will get money from people who would like to invest in the company. They would then use the money for the other things that the company may need. Take note that there are different types of shares that companies may provide.

There are some that would offer shares that will allow the shareholders to take a vote with the other things that the company would like to do so that it can improve in the future. There are also some shares that would allow the shareholders to get some money at the end of each year. Some may choose to invest in shares that they would sell when the shares are high. This would allow them to have excess money to invest more.

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h. George

h. George

Government employee and a part-time content writer.

h. George
H. George, Copywriter, MA in English, California

Answered Feb 26, 2018

First, let’s review what a share is. A share is the word used to describe a piece of ownership interest in a company. Companies issue shares in order to raise money to help them financially. When a company is new, they might issue shares to help them get started. They might need to purchase real estate, inventory, buildings or equipment.

After the company has been established for a while, they might issue more shares to help them expand and grow by purchasing new technology or more equipment. When/if a company makes a profit, shares are then used to determine how much of the profit is paid to the owners, based on the number of shares they own.

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