As explained in the previous topic,

Imagine a business is set up with initial investment of say 10 billion. The promoter, the person who starts this venture has say 40 billion and needs another 60 billion. So he may opt for getting this amount from public in a country.

So he will get the government permission for the same explaining the authorities the need.

This investors along with the promoter is called share holders, which directly mean that they are pro data share holders in the new company and they will be eligible for the profit share or any other benefit that may company get in future.

Note that, this also means that they will be eligible for the losses too. But, one point to note is that the loss will be only up to the level of their investment. That means a person will not be asked again to give money to fill up the losses.

This 100 billion is split into X stocks of face value y , where x X y = 100 billions.

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