Actions: introduction to this product high-yield

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A paper as action formerly
A paper as action formerly

An action is a property title issued by a capital company (e.g. a limited company or a Société en commandite par actions). It gives its holder the ownership of part of the capital, with the rights associated: intervene in the management of the company and remove an income called dividend.

Actions allow to take part directly in the life of a business: you enjoy good health and its difficulties. When they are traded, the shares are one of the easiest to buy and sell instruments. But keep in mind that the value of an action can descend to zero if the company goes bankrupt. It n no of companies to big to fail.

The holder of shares qualified shareholder and shareholders constitute ownership. L´action is also classified as securities (what a surprise lol).

The preference shares

There are also specific actions l´on as preference shares. Preference shares are governed by articles L. 228 – 11 et seq. of the Commercial Code.

Actions can preferably be issued in all types of societies by shares (listed or not). Preference can be capital intensive (special dividend, often very interesting) or policy (voting or information reinforced), it can be positive (strengthening of a right) or negative (limitation or suppression of a right), without there should be balance between the advantages and disadvantages.

When a title has more than one category, these categories are traditionally designated category A and category B. Berkshire Hathaway (ticker: BRK), the company of Warren Buffett (one of the greatest investors of all time and my favorite), has two classes of shares.

 

(ADP) dividend action

Since 1978 the companies have the possibility of issuing of ADP. It's shares with voting rights is posted in d´autres no terms, but the dividend is a priority, that is, the payment is carried out in priority to the common shares. Duties are lower with this type of action, it is therefore better paid. Furthermore the minimum amount of the dividend must be at least 7.5 per cent of the nominal value of the share.

In the event that the dividend could not be made because of insufficient profits, the balance would be carried forward the following two years. And finally if the situation lasted over three years the right to vote would be reinstated and ADP would become a regular action.

It should not be confused action and shares

do not confuse stock and shares.
The main difference is their mode of transmission which is simplified for the shares due to the speed of business imperatives. Thus the capital of a LLC (limited liability company) is composed of shares and not actions, it is the mutual fund (FCP).

Who can create actions?

In France the law assigns the quality of actions to titles that make up the capital:

  • Anonymous companies (SA), a company is said to be anonymous, because shareholders succeed one another without necessarily knowing; the importance is given to capital rather than people
  • Simplified corporations (SAS)
  • Limited partnerships with shares (SCA)
  • Of the SICAV (investment companies with variable capital), UCITS that are anonymous corporations

Since order No. 2008-1 of January 22, 2009, the public concept of call for savings has disappeared in favour of the European appellation 'Offer to the Public of securities financial', thus removing the french regime, which was poorly understood abroad.

Removal of the threshold of minimum capital of 225 000 euros for companies using public savings

The obligation to have a share capital of 225 000 euros at least if the company publicly appealed to the savings is deleted. Article L.224 – 2 of the commercial code modified specified that the minimum threshold of the capital stock of corporations (except the SAS) is set at 37,000 euros, even in the case of public supply or if the securities of the company are registered in the negotiations on a regulated market. There rarely anyway securities with a small capital.

The rights attached to shares

Common shares this time confer on their owners various types of rights:

Political rights (all economic extra rights): right to information and right to vote.

Financial rights: right to dividends, right to reservations, right to the proceeds of liquidation.

Proprietary rights: actions are tangible property (of the VMP), they are an asset in the patrimony of the shareholder. Subsequently, the general pledge of the creditors right allows them to grasp them; the shareholder can also assign or obtain credit in pledge; they may also be the subject of a loan (for expendable property, transfer of enjoyment leads the dispossession of property).

 

Hold shares, East – this risky?

To hold and manage on-line actions, an account opening titles is necessary.

By nature, hold shares is a risky investment. You bet on the potential of capital gains related to the evolution of the share price and the prospect of achieving a capital gain at the time of resale of the shares. You can also bet on the performance of l´action or the net asset value of the company. Unfortunately it is possible to lose some or all of its investment including si l´investisseur:

sold his shares at a loss, he made a valuation and loses a part of its initial (for example, a shareholder who buys an action X in 10 euros for the resell 2 years later during 7 euros, made a loss of € 3);

If the company goes bankrupt, it may lose all of its investment.

But even in the worst case, the shareholder cannot lose more than the amount originally invested. So quoiqu´il happens you cannot lose more than your bet.

Limited liability

The advantage of investing in shares is limited in the amount of l´action liability.

 

Or buy shares?

The exchange of shares is done on-site (i.e. stock exchange) listing. In France, the rating place best-known, where takes place the majority of the transactions is NYSE Euronext Paris (traditionally known as the Paris stock exchange). On NYSE Euronext Paris actions are integrated and compartmentalized according to different markets:

 

-Regulated markets (compartment A, B, C, based on the market capitalization of the action). There's the CAC 40, the midle etc

 

-Non-regulated markets (free market)

 

-Alternext

I invite you to read l´article types of markets

 

On the other hand, mode of trading in the shares is mainly via the stock exchange, but in some cases it may be willing to over-the-counter (OTC).

 

 

Purchase and sales on the french market orders are centralized on the computer system of the stock exchange. FYI the ACC is rating assisted continuous l´abreviation. The values (or shares) the most liquid and active (i.e. those which are the most traded, and for which there was no shortages of supply and demand), are traded continuously, continuously. Other values are exchanged once or twice per day scheduled, there are therefore two fixing(moment d´échange) in the day to 11:30 and 4: 30 p.m. (1 auction at 3 pm for the free market)

.

 

-Rating continuous: French shares are traded continuously from 9 h to 17 h 40. There are large groups known as Crédit agricole, danone…

 

 The course of action

 

An action that is traded will see its price, i.e. the price fluctuate daily. The course of action depends on different elements specific to the company and also outside it.

 

The company's results will play on its course, but also forecast profit for the future, its location and the economic sector to which the company relates.

Confidence in the company and finally the general economic conditions will have an impact in the price.

The price of the share on the market will be determined according to supply and demand.

Job and demand will also intervene.

And although d´autres factors such as weather (proven c´est Yes).

The most or loss

 

An action may be sold on the stock exchange at any time. This sale may release a more or valuation. When the action is sold more expensive than at the time of purchase, the shareholder wins money by making a profit, he directed a taxed capital gain (see dedicated l´article). When the action is sold cheaper than at the time of purchase, a loss is realized, a valuation is therefore clear.

The dividend

 

The dividend is the part of the company's net profit distributed to the shareholder. The shareholder will receive a revenue associated with its action. The distribution of this income will therefore provide for shareholder performance on its investment.

 

Example: A action which cote 10 euro distributes a dividend of 10 euro per share. Performance is therefore 10%.

 

Often the shareholders are very interested in what l´on calls the PER or price earning ration or ratio course on profits.

 

To go further:

In addition to the actions exist so-called securities composite or hybrid related actions:

the bond: bonds with share warrants

the ABSA: shares of stock warrants

the BSA: warrants (of shares) autonomous

Oceans: convertible bonds into shares

the ORA: refundable bonds into shares

Conclusion:

There are so many things to say about the actions that this article cannot be qu´une introduction. I invite you therefore to deepen a little more.

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