The stock market
The stock market invites the general public to raise the necessary funds. Investors who have excess cash can then contribute by buying shares in those companies. Those investors then become the owners of the company. Once a company calculates profits over a period of time, it distributes a fair profit percentage to the shareholders. This is the benefit to shareholders. It’s called dividends.
Neither individual businesses, partnerships, nor companies can sell shares in the stock market. A person running a single business can obtain the necessary funds from his own savings or bank loans. In a joint venture, partners often jointly raise their funds. Although a private company can issue shares and raise capital (funds), they are not permitted to sell shares in the market.
This is because the maximum number of shareholders in a private company is limited to 50. If private companies sell publicly traded shares in the stock market, the maximum number of shareholders can increase to more than 50. Therefore, the Companies Act does not permit private companies to sell shares in the stock market.In order to sell shares in the stock market, the company must be registered as a public company. A common feature of public companies is the lack of a maximum shareholder limit. Therefore, public companies are able to sell shares in the stock market. For that, the public company must be registered in the stock market. In order to issue shares in the stock market, the company that wishes to do so must become a registered company and listed in the stock market.
That is, the stock market is a place that allows listed companies to raise funds and provide investors with excess cash. While the stock market is usually introduced as a stock exchange, these transactions can be done electronically via computer and the Internet.