What is an action?

We explain what an action is and the types of actions that exist. In addition, what the common actions consist of.

  1. What is an action?

In the financial environment, it is known as an action to a security issued by a specific company , and that is equivalent to the monetary value of one (1) of the equal parts in which the company’s share capital is fragmented .

That is, stocks are investment documents that you assigned to the holder ownership of a portion of the principal social , which will be higher in the more shares you have. The holders of these securities are known as  shareholders .

Commonly, the shareholders of a company enjoy political rights (vote at the shareholders’ meetings to decide on business management), and economic rights (receive benefits from the company and eventually earn profits in relation to the number of titles they manage).

However, as the shares  are usually freely transferable , there are usually majority and minority shareholders, the former always with greater decision power when handling larger portions of corporate social capital.

The return of the shares, that is, the money they generate to their holder, is usually considered an investment in equities, that is, that lacks a fixed payment determined by contract in advance, but varies according to the performance of the company and Obviously, to the amount of shares you have. But all the shareholders of a successful company receive economic benefits from it.

The purchase and sale price of a share will depend on the company’s equity at the time of the transaction. In many cases, the purchase of cheap shares and their subsequent more expensive sale is an indicator of good mercantile performance, so that their ownership is part of the active assets of each investor . This value has different mechanisms to quantify and allocate, as is the case in stock market indices (the stock market).

  1. Types of actions

Limited voting actions give the right to vote only on certain issues.

There are the following types of actions:

  • Common or ordinary . They give the holder participation in the corporate assets and the right to voice and vote in the corporate meetings of the company.
  • Preferred . Stocks with a generally fixed dividend rate, with preference to pay above the common ones, for various financial reasons.
  • Limited voting . They grant the holder the right to vote only in certain business matters, in return they are usually preferred or yield a dividend higher than the common shares.
  • Convertibles . Those actions that can be converted into bonds (although the usual thing is to happen in reverse).
  • Industry . Instead of providing capital to the company, the holders provide services or a specific job and receive shares in return from it.
  • Released . Those that do not require payment by the holder, since they are the payment of benefits or utilities that he should have received.
  1. Common actions

common actions
Common shares lack an expiration date and are negotiable.

Common shares are, above all, financial assets. They lack an expiration date , are fully negotiable and represent a small portion of the company’s property.

Its issuance usually responds to urgent financing needs, but it is the most expensive way to raise funds , since the returns generated in the future should allocate a part to the benefit of the shareholders.

On the other hand, selling shares means losing the autonomy of the company in some way, as shareholders usually gain voice and vote in decision making.

The shareholders also have a limited responsibility in the company, that is to say, that their personal assets will not be at risk before the company’s performance nor will they automatically be part of the company’s total assets.

Thus, a common shareholder may not lose more than his financial contribution to the company (equivalent to a defined number of shares purchased, for example).

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