Investment: Private and Public Stock
Privately owned companies are just that, private. The owners can do as they please. If two people invest equally in a business, then they most likely agree to own equal “shares” of the company. In this situation, they probably receive equal returns from revenue. The owners and investors are allowed to come up with their own agreements regarding investments and returns.
S corporations do not have to be publicly traded companies, but can elect to become so to raise additional capital. If stock is sold to the public, then the company must have a board of directors. The investors, or stockholders, must be able to participate in the election of these people. In addition, stockholders may review the records and, depending on the agreement, may have the ability to vote on business decisions such as selling assets.
All examples are for educational purposes only, and should NOT be construed as investment advice. Always contact a qualified tax attorney or advisor prior to making any financial decision.
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