Stock Market

By
12th Commerce
 WHAT IS STOCK MARKET?

The stock market broadly refers to the collection of

exchanges and other venues where the buying, selling, and
issuance of shares of publicly held companies take place.
But first we need to know how a company is formed and
how is issues the shares.
 FORMATION OF COMPANY

The formation of a company goes through a number of steps, starting from idea
generation to commencing of the business. This whole process can be broken down into 4
major phases or steps, which we will be discussing in the lines below.
• The major steps in formation of a company are as follows:
1.Promotion stage
2.Registration stage
3.Incorporation stage
4.Commencement of Business stage
• Promotion Stage: Promotion is the first step in the formation of a company. In this phase,
the idea of starting a business is converted into reality with the help of promoters of the
business idea.
• Registration stage: Registration stage is the second part of the formation process. In this
stage, the company gets registered, which brings the company into existence. A company
is said to be in existence, if it is registered as per the Companies Act, 2013. In order to get a
company registered, some documents need to be provided to the Registrar of Companies,
like Memorandum of Association, Article of Association, etc.
• Certificate of Incorporation: Certificate of incorporation is issued when the registrar is
satisfied with the documents provided. This certificate validates the establishment of the
company in the records.
• Certificate of commencement of business: Certificate of commencement of business is
required for a public company to start doing business, while a private company can start
business once it has received the certificate of incorporation
 WHY DO COMPANIES ISSUE SHARES?

• Companies issue shares to raise money from investors who tend to invest their money. This
money is then used by companies for the development and growth of their businesses.
• The main motto of companies behind share issuance is to raise capital. Companies need money
for their operations and expansion and equity shares help them with the same.
• On the other hand, the investor who buys these shares gets part ownership in the company.
 HOW DO COMPANIES ISSUE SHARES?

The important steps in the procedure of share issue are:

• Issue of Prospectus: Prospectus is an invitation to the public that a new company has come into
existance and it needs funds for doing business. It contains complete information about the
company and the manner in which the money is to be collected from the investors.
• Receipts of Applications: The prospective investors intending to subscribe for the shares have
to apply within 120 days.
• Allotment of shares: If the company receives minimum subscription, the company may
proceed with allotment of shares to the prospective investors.
 WAYS OF BUYING AND SELLING OF
SHARES 
• Through a stock broker: They arrange the transfer of stock from seller to a buyer. Both the buyer
and the seller of the share pay commission known as brokerage to the broker.
• Directly from the company:
• If at least one share is owned, most companies will allow the purchase of shares directly from the
company through their investor relation department.
• A direct public offering is an initial public offering (IPO) in which the stock is purchased directly from
the company, usually without the aid of brokers.   
 WHO IS A SHAREHOLDER?

• A shareholder is an individual or a company that legally owns one or more share

of a company. 
• Shareholder are granted privileges depending on the class of share, including the
right to vote on matters such as elections to the board of directors, the
right to share in distributions of the company's income, the right to purchase new
shares issued by the company, and the right to a company's assets during
a liquidation of the company.
• Shareholder vary from individual shares investor to large hedge fund traders.
 TRADING 

• The shares of company are in general be transferrable from one shareholder to

another. This leads to buying and selling of shares termed as trading. 
• Investors usually buy and sell shares on the exchanges through a stock
brokers registered with the exchange.
• A company may list its shares on an exchange by meeting requirements and
maintaining the listing requirements of a particular stock exchange.
DIFFERENCE BETWEEN SHARES AND
STOCKS 
 DIFFERENT PLATFORMS FOR STOCKS
TRADING IN INDIA 
• Zerodha Kite

• Upstox Pro

• FYERS ONE

• Sharekhan Trade Tiger

• Angel Broking Speed Pro

• Trade Station

• Trade Eye

• Trade Racer

• Trader Terminal (TT)

• NSE Now
THANK YOU