Thread Tools Display Modes
Old 05-02-2006, 04:13 PM
chefIL11 chefIL11 is offline
Join Date: Sep 2003
Location: 37.7 Lat , -89.2 Long IL
Posts: 510
How many shares of stock in a company does one need to 'own' the company?

This may be a little difficult to answer so I apologize if the question seems ambiguous......

Lets say a company has .4 billion shares. If I have enough money to buy .2000001 shares and buy them, technically, I would own more than half. Would this entitle me to enough shares in order to become owner of the company?

or would this just add to the .4 billion shares the company already has?

If this is way to ambiguous, then slap me and tell me no..... then please, explain it to me.
Old 05-02-2006, 04:21 PM
Shagnasty Shagnasty is offline
Charter Member
Join Date: May 2000
Posts: 27,234
It is just a matter of degree. Even someone that owns one share owns a piece of the company. Ownership of 50.1% of a company's stock would let someone have a controlling interest that would allow them to influence company policy alone. However, even then, total ownership is the right term.
Old 05-02-2006, 04:26 PM
Shagnasty Shagnasty is offline
Charter Member
Join Date: May 2000
Posts: 27,234
I see I didn't address your question directly in some ways. Stocks are released during Initial Public Offerings and possibly during later stock sales if any are held by the company in reserve. There is a finite pool of them and they define ownership in a way. Companies don't get any money from investor to investor sales after the IPO. They get their money up front and then the public has its way with it between themselves.

The pool that you speak of should include all of that companies stock and 50.1% ownership of that would usually be a controlling interest. That controlling interest may be able to leverage a way to buy more shares but they would usually just continue to be held by other investors.
Old 05-02-2006, 04:30 PM
clairobscur clairobscur is offline
Join Date: Aug 2001
Location: Paris
Posts: 16,837
Just to add that owning 50,1 % of the shares doesn't necessarily mean that you get 50,1% of the votes.
Old 05-02-2006, 04:43 PM
Polycarp Polycarp is offline
Join Date: Aug 1999
Location: A better place to be
Posts: 26,718
Those decimal points are confusing as all get out. Let's discuss forms of ownership first.

A company can be a single proprietorship, a partnership, a corporation, or any of several other less common modes of ownership, such as a cooperative, a joint venture, LLC, etc.

Joe Smith makes duck decoys -- good duck decoys, ones people want to buy. He goes into business for himself as Marshside Duck Decoys, filing a D/B/A certificate with the county, publishing a legal ad in the local paper, or whatever the state requirements for going into business under a given name happen to be in his jurisdiction. Joe owns Marshside Duck Decoys free and clear; it's him doing business, and legally there is no distinction between Joe Smith and Marshside Duck Decoys except for tax purposes (he has to distinguish between business and personal expenditures there).

Joe does well at his business and in fact confers with Harry Brown, another duck decoy maker who lives a few miles away, and with Pete Lopez, yet another DDM. In fact Joe and Harry are doing so well that they decide to open a decoy store and workshop, and hire Pete full time. They form a partnership, a business venture jointly owned by the two of them. Ownership of the partnership, its assets, proceeds, debts, profits, etc., are the joint property of the two of them, and to be split between them in accord with the partnership agreement, or in accordance with state law if they have neglected to specify.

The duck decoy business is burgeoning, and Joe and Harry decide to incorporate. This forms a legal fictitious person, which is owned originally by Joe and Harry. They can sell shares of stock in it, to get more capital. Let's say they issue 1000 shares, each retaining 251, so that they hold a majority interest between them, and sell the remaining 498. They now have the face value of the 498 shares as additional capital to expand their store and factory. Ownership is divided between Joe (25%+), Harry (25%+), and the people who bought shares in the new corporation. Joe and Harry between them have control of the corporation. But if they disagree, either of them can get the support of shareholders who together own at least 250 shares to give a majority interest to that group. Often this is done by obtaining proxies, a document that says, in essence, "I, Jack Shareholder, trust Joe Smith to run the company in which I hold 50 shares properly, and I therefore award to him revocable voting rights to the 50 shares I hold."

With a million shares of stock out in a corporation, a person would need to own 500,001 shares to say they "owned the company" -- which would mean they had effective control of it. More practically, though, it's probable that they own 100,000 shares outright and have proxies from other shareholders to give them majority control of the company.

A cooperative is owned jointly by the producers or consumers who make use of it. For example, ten watermelon growers might band together for greater influence on the watermelon produce market, and constitute themselves the United Watermelon Growers Cooperative. Or a group of contractors might band together to get greater influence over the construction materials market, as a purchasers cooperative.

A limited liability company is a rather unique operation created by some states and recognized through all of them in which a given person or group of persons puts specific assets into that company and through proper use of the state law creates a corporation-like distinct legal entity for the purpose of doing business with those specific assets. In other words, a millionaire desiring to develop a beautiful clifftop site with a high-end condominium complex may create an LLC, put a chunk of his money into it, and buy the land and build the condos there, financing it himself, but protecting himself from the liability of someone falling over the cliff, construction accidents, and the like through the LLC. A group of doctors may incorporate their practice as a PLLC (professional limited liability company), restricting their liability for malpractice and the like to what they invest in the PLLC, and hence not risking their own homes to a malpractice suit against another PLLC member (as would be the danger if it were a partnership).
Old 05-02-2006, 04:45 PM
Giles Giles is offline
Charter Member
Join Date: Apr 2004
Location: Newcastle NSW
Posts: 12,856
Originally Posted by chefIL11
Lets say a company has .4 billion shares. If I have enough money to buy .2000001 shares and buy them, technically, I would own more than half. Would this entitle me to enough shares in order to become owner of the company?

or would this just add to the .4 billion shares the company already has?
If a company has so many shares, then that means it can sell up to that many shares to others. It doesn't mean that (in any real sense) the company owns the shares. In fact, the shares represent fractions of the company, and the company is selling pieces of itself to the shareholders.

When a company gets established, it gets established with a set of rules (subject, or course, to corporation law in the jurisdiction where it is established). Those rules set out important things like what business the company is set up to do, and details, like the rights of shareholders. It is possible to set up different classes of shares, so that some shareholders get a vote, and others don't. It's also possible (and this is more likely with nonprofit corporations) to say that each shareholder gets one vote, regardless of the number of shares, rather than the more usual one vote per share owned. So to answer the question in a real case, you'd need to look at the rules of the company.

But, in the normal case, where each share gives the right to one vote at company meetings and in elections of directors, owning one more than 50% of the shares would give you a controlling interest in the company. This would be limited by the general legal principle that you could not deprive the other shareholders of their legitimate financial interests. So, for example, the other shareholders might be able to stop you selling all the company's assets to yourself at ridiculously low prices, and hence running the company into insolvency.
Old 05-02-2006, 04:46 PM
Gfactor Gfactor is offline
Join Date: Dec 2003
Location: Detroit
Posts: 9,490
Originally Posted by chefIL11
or would this just add to the .4 billion shares the company already has?
Depends on where those shares came from. Under some circumstances, a corporation can issue new stock (registration required). If you buy newly issued stock, everyone's share of the company gets diluted. In your example, if the stock was newly issued, there would be .61 billion shares now, so you would not have a controlling interest.

If, as is more common, you bought existing stock, you would own a controlling interest in the company.

Even then, though, you wouldn't "own" the company. You'd own the right to win most votes.

Although owning 51% of shares does mean that you own 51% of the company, it does not give you the right to use a company's building, equipment, materials, or other property. This is because the company is considered a legal person, thus it owns all its assets itself. This is important in areas such as insurance, which must be in the name of the company and not the main shareholder.

More on stock dilution:
Old 05-02-2006, 04:52 PM
scm1001 scm1001 is offline
Join Date: Jun 2001
Location: cambridge
Posts: 2,340
Originally Posted by clairobscur
Just to add that owning 50,1 % of the shares doesn't necessarily mean that you get 50,1% of the votes.
I hadn't realised that. Could you clarify - thanks
Old 05-02-2006, 05:25 PM
Exapno Mapcase Exapno Mapcase is offline
Charter Member
Join Date: Mar 2002
Location: NY but not NYC
Posts: 29,638
Many stocks are issued in classes, in which Class A generally has voting privileges, while Class B does not. (There may be other even more specialized classes.) Here's a real-life example: Viacom
Q: What is the difference between VIA and VIA.B?
A: Viacom has two classes of common stock: Class A, which is the voting stock, and Class B, which is the non-voting stock. There is no difference between the two classes except for voting rights; they generally trade within a close price range of each other. There are, however, far more shares of Class B outstanding, so most of the trading occurs in that class.

Q: Can I convert one class of Viacom common stock into the other?
A: You can convert shares of Viacom Class A common stock into shares of Class B common stock on a one-for-one basis, but you cannot convert Viacom Class B common stock into Class A common stock.

Q: Why is Class A (voting) common stock so thinly traded?
A: National Amusements, Inc. beneficially owns a majority of the Class A common stock. Sumner M. Redstone, the controlling stockholder of National Amusements, is Viacom's Chairman.
Companies do this because they want to raise money without giving up control. Purchasers accept this arrangement because it provides an investment opportunity that would not be available otherwise. Essentially the stockholders are giving money to Sumner Redstone because they feel they can get a better return on their investment by letting him grow his company than they could elsewhere, even with voting rights.
Old 05-02-2006, 05:35 PM
Cerowyn Cerowyn is offline
Join Date: Oct 2000
Location: In a hole
Posts: 3,437
Just to clarify what Exapno Mapcase is explaining about share classes, they are entirely determined by the corporation. There is no set standard. In addition to voting rights, share classes can also determine the payment of dividends.


Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is Off
HTML code is Off

Forum Jump

All times are GMT -5. The time now is 02:40 AM.

Powered by vBulletin® Version 3.8.7
Copyright ©2000 - 2018, vBulletin Solutions, Inc.

Send questions for Cecil Adams to:

Send comments about this website to:

Terms of Use / Privacy Policy

Advertise on the Straight Dope!
(Your direct line to thousands of the smartest, hippest people on the planet, plus a few total dipsticks.)

Publishers - interested in subscribing to the Straight Dope?
Write to:

Copyright 2018 STM Reader, LLC.

Copyright © 2017