The joint-stock company

A joint-stock company is a large firm that raises its starting capital by selling shares to many people; its owners (shareholders) answer for the firm’s debts only up to the money they paid for their shares. A share is a security confirming a contribution to the company’s capital and giving its owner the right to a part of the firm’s profit; the price written on it is the nominal value. The part of the yearly profit paid to a shareholder is called a dividend. Shares are bought and sold on an exchange, and their market price, the kurs, changes depending on the dividend: a share with a nominal value of 8 000 so‘m sold for 10 000 so‘m has a rate of 125 percent. An ordinary share does not guarantee a dividend but gives the right to vote at the general meeting; a preferred share guarantees a dividend as a set percentage of its price but has no vote. A company whose shares are sold to anyone is of the open type, and one whose shares go only to a set circle (for example founders and employees) is of the closed type; more than half of the shares (a controlling stake) gives full control of the company. Note: since 2014 Uzbek law no longer divides joint-stock companies into open and closed types, but these ideas still appear in economics books and in other countries. The calculations in this topic are for learning only and are not advice on buying securities.