I’m on a kick of watching business investment shows. The investors ask for certain percentages of the business, but what does that actually get them? What’s the difference between a 5% stake and a 25% stake? Do they take a profit share, do they also take on a percentage of the businesses debts? What is equity in layman’s terms?
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u/FreakyStyley23’s answer is correct, at least in theory. In practice, the number of shares determines two things (edit: for corporations):
1. If the company pays a dividend, and not all do, you get a share of that in direct proportion to the amount of equity (or shares) you have.
2. You get to vote on a few matters usually once a year, mostly on who the board of directors of the company are and if you approve of the auditing company. Sometimes there are a few other issues, such as an advisory vote on executive compensation. The number of shares you have determines the number of votes you get.
With point number 2, it is rare, although it does happen, that any of the board candidates lose a vote.
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