Meera and Ravi start a company that makes school notebooks. They agree that Meera owns three quarters of the business and Ravi owns one quarter. How can they keep track of that agreement if another owner joins later?
They divide ownership into 100 equal units called shares. Meera holds 75 shares and Ravi holds 25. A person who owns shares is a shareholder. In this example all the shares carry the same rights.
Build the ownership register
Ravi sells you five of his shares. Before you move the control, predict whose share count falls. Does the company now have more than 100 shares?
Who owns the notebook company?
Each square stands for one share. Meera’s 75 squares stay fixed. Move shares from Ravi to you.
Meera owns 75 shares. Ravi owns 25. You own 0 of 100 shares (0%).
Check the five-share transfer
Meera still owns 75. Ravi has 20. You have 5. Together that is still 100. Your fraction is 5 ÷ 100, or 5%. The payment goes to Ravi because he sold existing shares. A company can also issue new shares. That changes the total and is a different transaction.
What do those five shares give you?
You own part of the company. The company itself owns the printing machine and the notebooks in its warehouse. Owning 5% does not give you permission to take five out of every hundred notebooks home.
Ordinary shares can carry voting rights and a right to share in dividends. A dividend is money a company decides to distribute to its shareholders. Suppose this company declares ₹2 per share. Your five shares receive ₹10. If it keeps its earnings to buy a new machine and declares no dividend, there is no dividend payment that time.
What changes when the price changes?
You paid Ravi ₹40 per share, or ₹200 for five. Later, two other people trade one share at ₹50. Using that latest trade as a reference, your five shares are now valued at ₹250. You still own five shares out of 100. The price changed; the ownership register did not. The ₹50 increase in the quoted value is not cash paid into your account.
Try a different company
You own five shares in a company with 1,000 equal shares. How much do you own?
Show the calculation
5 ÷ 1,000 × 100 = 0.5%. Knowing only that someone owns five shares tells you very little until you know how many shares exist.
The notebook company and prices are invented. Next, follow one share through a trading session to see where a chart gets its numbers.