Share Certificate even called as Stock Certificates is a legally approved paper released by the company in order to officially state the rights of the company shares to the shareholder or the stockholder. Generally a company raises its capital by releasing company shares which have a particular price. The capital raised might be to manage the huge investments required to begin any gainful business or just to increase its funds. These shares are released in form of certificates- called as Share Certificate and an individual who buys these shares is called a shareholder. Any individual can purchase company shares and get a share certificate which is nothing but a confirmation of ownership and thus the share holder gains the right to vote within the company and can even take part in the Annual General Meetings of the company. If the company releases five thousands shares in the financial market and if a share holder purchases five hundred shares it means that the shareholder holder of the company as he has bought the company shares in form of Share Certificates.
However investing in shares is a dicey business. Consider if you buy the shares of a specific company in order to raise the capitals for the company, the company further invests your money in its business functions where the company is at a threat that it might face a gain or a failure. The Share Certificate has a specific value for which it is purchased. Now, if the company gains great profits automatically the value of your shares rises and so does the Share Certificate as more and more people wish to share in this company. At this point of time, you keep your shares with the company for a longer period suppose more than 3 months, 6 months or even more, you earn payment known as Dividend and recorded using Dividend Vouchers. Dividend payment is made to the company share holders after the company has made profits. You can further sell off the company shares to make profits for yourself, the company has no authority over this.
On the other hand, if the company faces a failure, actually it is a loss for you as the price of shares is fallen, you have two options either sell off the shares and tolerate the losses or wait till the company starts making profits in future and this is generally unpredictable. This is a major risk faced while purchasing company share certificates. A person should make a detailed study to know if the company is going to grow or loose in future but then this is again a dicey judgment as nobody knows what destiny holds for you.
Investing in shares is a type of gambling where the profit or failure depends on how the company performs in its future, for which it increases its assets by issuing shares that are purchased by shareholders in form of Share Certificates in the stock market with a particular price. He being the shareholder of the company, the company pays him the Dividend either yearly, half yearly or quarterly depending on the company's terms and conditions (as mentioned on the application form).
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