What is a Share?

A share represents a portion of a company’s share capital. The holder becomes a shareholder. As a shareholder, you are entitled to profits and voting rights. In other words, you become a co-owner of the company. Like any equity participation, shares come with both opportunities and risks. On one hand, you can benefit from profits and price increases; on the other hand, returns depend on the company’s future earnings.

Not all shares are structured the same way, so be sure to carefully read the informational documents.

Generally, shares can be categorized based on two criteria: how the share capital is divided, and how ownership is assigned. Here are a few examples:

1. No-par Value Shares vs. Par Value Shares (relating to the division of share capital)

A share divides the share capital of a joint-stock company. This can be done by issuing a specific and limited number of shares — this is called a no-par value share. Alternatively, the company can assign each share a specific nominal value, referred to as a par value. This results in a par value share:

No-par Value Share: For example, if 1,000 no-par value shares are issued, each share represents one-thousandth of the company. This model is especially transparent and flexible.

Par Value Share: This share carries a fixed amount, e.g., €1, as par value. The total sum of all par values then constitutes the company’s share capital.

2. Ownership Assignment: Registered Shares vs. Bearer Shares

Registered Share: The shareholder is registered by name in the company’s share register. In the past, the shareholder’s name was also written on the share certificate. When shares were transferred, the predecessor’s name was crossed out and the new shareholder was recorded.

Bearer Share: The bearer share does not carry a name. Whoever physically holds the share is presumed to be entitled to its rights — at least in the non-digital world. Today, this is managed using information technology, such as through securities accounts or other digital registers.