This lecture has been prepared by Ammar Younas, Senior Lecturer in Commercial Law at Westminster International University in Tashkent for the Class of 2019-2020 Introduction to Business Law.

1. Shares
Ammar Younas

3. The Dow Jones Industrial Average is a stock market index that measures the stock
performance of 30 large companies listed on stock exchanges in the United States. Although
it is one of the most commonly followed equity indices, since it only includes 30 companies
and is not weighted by market capitalization and is not a weighted arithmetic mean.

4. https://www.marketwatch.com/story/the-dows-tumultuous-120-year-history-in-one-chart-2017-03-23

5. War and the World Economy: Stock Market
Reactions to International Conflicts
Gerald Schneider and Vera E. Troeger
The Journal of Conflict Resolution
Vol. 50, No. 5 (Oct., 2006), pp. 623-645 (23 pages)
• https://www.jstor.org/stable/27638514?seq=7#metadata_info_tab_c
ontents

6. Monopolies,
Technology and
Violence

10.  Financial Services and Markets Act 2000, ss 72-103, sch.
10
 Companies Act 2006, ss 552 and 553, s 578

12.  Capital contributed in exchange for shares apart from
share premium is called a share capital (nominal value of
the shares multiplied by the number of shares)
 All funds received as share premium should be kept in a
separate share premium account

13.  Share premium received by a company may be used by it to
pay the expenses of the issue or any commission paid on the
issue or to make any other payment related with shares
 A company may have different classes of shares with differing
class rights simultaneously

14.  By taking shares form the company in exchange for a
contribution of capital
 Through an employees’ share scheme
 By taking a transfer of shares (on sale or gift or as a trustee
from an existing member)
 Through transmittance, when shares of a shareholder, who is
dead, are transmitted to his/her family or legal representative

15. It means that a shareholder
 Can influence the way the company’s affairs are conducted by
voting at meetings of members
 Will participate when the company makes a distribution of its
profits to its members (receive dividends)
 Will receive a return of contributed capital when the company
is wound up (provided there is any property left after paying
the company’s creditors)

17.  If there is no prior limit on the amount, which the
holder of a share may receive in a distribution, either as
an annual dividend or as a distribution of surplus assets
on winding up, the share is called an ordinary share (CA
2006, s 560) or an equity share

19.  A preference share is a share, which entitles the holder
to an annual dividend of a fixed amount per share
(usually expressed as a percentage of the nominal
value of the share), paid in priority to any dividend
payments to other members

21.  The right to receive a preference dividend is cumulative, that
is, if the dividend is not paid for one period, then double
payment is due the next period
 Deferred share is a share bearing the restriction that no
dividend can be paid to the shareholder for a financial year
unless ordinary shareholders are paid a certain amount for
that year. Deferred shares are also referred to as ‘founders’
shares

22.  Redeemable shares in a company offer temporary
membership of the company with repayment of the nominal
value of the shares (and in some cases redemption premium)
at the end of the period of membership.The shares are
redeemed and the membership comes to an end either after a
fixed period or at the company’s option depending on the
terms of redeemable shares

23.  Within two months after the allotment of a company’s shares
the company must, under penalty, complete and have ready
for delivery, share certificates for all the shares allotted, unless
the conditions of issue of the shares provide otherwise

25. What are Stocks?
• Stock is ownership in a publicly traded company.
• Stock is a claim on the company’s assets and
earnings.
• The more stock you have, the greater your claim as
an owner.
• Watch: https://youtu.be/JrGp4ofULzQ

26. Difference Between
Stocks and Shares
• Shares are a part of
something bigger i.e.
the stocks. Shares
represent the
proportion of
ownership in the
company while stock
is a simple
aggregation of shares
in a company.

27.  Common Stock – most common form of
stock.
 One vote per share
 Dividends are not guaranteed
 Preferred Stock
 Fixed dividend
 May not include voting
 Companies may customize other “classes” of
stock.

28.  All securities traded on the stock exchange
have a ticker symbol
 Microsoft (MSFT)
 Southwest Airlines (LUV)
 Ford Motor
Company (F)
 Google (GOOG)

30.  The first time a stock is sold to the public
 Sold in the Primary Market

31.  Primary Markets – where stocks are created
 Secondary Markets – investors trade previously issued stocks
 The Stock Market
 Companies are not involved in the buying and selling of their
stock.

32.  Where Stocks are Bought and Sold
 NewYork Stock Exchange (NYSE)
 American Stock Exchange (AMEX)
 NASDAQ

33.  A collection of stocks—representative of the stock market
 A stock index or stock market index is a measurement of a section of
the stock market. It is computed from the prices of selected stocks
(typically a weighted average). It is a tool used by investors and
financial managers to describe the market, and to compare the
return on specific investments.
 Dow Jones – 30 most significant stocks in the stock market
 S&P 500 – 500 largest companies on the US stock market
 NASDAQ Composite – all stocks on the NASDAQ

34. Bulls and Bears
• Bull Market – the economy is great and stock prices
are rising

35. Bull and Bears
• Bear Market –the economy is bad and a recession is looming

37. Rank Company Industry Market Cap
#1 Microsoft Tech $1,050 billion
#2 Amazon Tech $943 billion
#3 Apple Tech $920 billion
#4 Alphabet Tech $778 billion
#5 Facebook Tech $546 billion
#6 Berkshire Hathaway Diversified $507 billion
#7 Alibaba Tech $435 billion
#8 Tencent Tech $431 billion
#9 Visa Financial $379 billion
#10 Johnson & Johnson Consumer Goods $376 billion
The Big Tech Era
Here is the current top 10 list of the world’s
largest companies by market
cap:

39. Common Stock
• Common stock represents a type of stock that pays a variable
dividend and gives the holder voting rights.
• A proxy is a stockholder’s written authorization to transfer his or her
voting rights to someone else, usually a company manager.

40. Preferred Stock
• Preferred stock represents a type of stock that pays a fixed dividend
but has no voting rights.
• Preferred stockholders earn the stated dividend, regardless of how
the company is doing.
• Preferred stock is less risky than common stock.
• Dividends on preferred stock may be lower than common stockholders would
earn, if the company is thriving over time.

41. • Income stocks
• Growth stocks
• Emerging stocks
• Blue chip stocks
• Defensive stocks
• Cyclical stocks
Types of Stock Investments

42. Income Stocks and Growth Stocks
• Income stocks are stocks that have a consistent history of paying high
dividends.
• Growth stocks are stocks in corporations that reinvest their profits
into the business so that it can grow.

43. Emerging Stocks
and Blue Chip Stocks
• Emerging stocks are stocks in young, often small corporations that
have higher overall risk than stocks of companies that have been
successful for many years.
• Blue chip stocks are stocks of large, well-established corporations
with a solid record of profitability.

44. Defensive Stocks
and Cyclical Stocks
• A defensive stock, or non-cyclical stock, is one that remains stable and
pays dividends during an economic decline.
• Cyclical stocks do well when the economy is stable or growing but
often do poorly during recessions, when the economy slows down.

45. Valuing Stock
• The par value is an assigned dollar value given to each share of stock.
• Market value is the price for which the stock is bought and sold in the
marketplace.

46. Stock Price
• Factors that affect price include:
• The company
• Interest rates
• The market
• Earnings per share

49. Uzbek Stock Exchange
• https://www.uzse.uz/?locale=en