What you'll learn
- What a stock/share actually represents
- Why companies sell shares to the public
- What rights you get as a shareholder
- The difference between owning a business vs owning a share
Imagine you and four friends start a lemonade stand. You each put in ₹1,000. The business is now worth ₹5,000, and each of you owns 20% of it. That 20% is your share — your slice of ownership.
A stock (or share or equity) is exactly that: a piece of ownership in a company. When you buy a share of Reliance, Tata Motors, or Infosys, you become a part-owner of that company — even if your slice is tiny.
Private CompanyOwned by founders,family, few investorsLimited capitalfor growthPublic CompanyOwned by thousandsof shareholdersRaised ₹ via IPOfor expansion Private vs Public Company: The Journey to IPOWhy Do Companies Issue Shares?
Companies need money (capital) to grow — build factories, hire people, launch new products, or pay off debt. They have two main choices:
Borrow Money (Debt)
- Take a bank loan or issue bonds
- Must pay interest regularly
- Must repay principal on schedule
- No ownership given away
Sell Shares (Equity)
- Sell ownership pieces to investors
- No mandatory repayments
- No interest payments
- Give up some ownership & control
When a company chooses to sell shares to the public for the first time, it's called an IPO (Initial Public Offering). After the IPO, the company is "listed" on a stock exchange, and anyone can buy/sell its shares.