A company’s capital is split into shares. Each share is a unit of ownership in a corporation and is sold to raise funds for the firm.

Shares are usually classified into two types: equity and preference shares. Holders of equity shares have the right to a portion of the company’s earnings/profits as well as a vote in the company’s AGMs. Such a stakeholder must share the company’s gains as well as face its losses.

Preference shares, on the other hand, pay out only set dividends and have no voting rights. The company’s true owners are the equity stockholders. The primary market is where shares are offered for sale directly by the firm for the first time, whereas the secondary market is where shares are traded.