Proof of ownership
But how would in the near future the investors identify themselves as the owner of the company to Mehta if he later on refuses them the rights to ownership of the company.
So to identify themselves as the owners, the company has to issue to all the shareholders a share certificate which identifies the investor as a part owner of the company. A company is divided in equal parts and each part denotes an equal degree of ownership in the company.
How is a share bought into existence
A company is divided in equal parts and each part denotes an equal degree of ownership in the company. Like in the above case the company will be divided in 100,000 equal pieces which shall be distributed to all the investors of the company in proportion to their amount of capital invested.
All will have to bring in capital
Mehta will also have to bring in capital if he wants an ownership of the company, that is, if he has to retain the control of company as the person holding majority of these 100,000 equal pieces will enjoy a controlling stake.
Just because Mehta is starting the business does not mean that he is a 100% owner of the business as he has sold a part of his business to the general public. The one who is bringing the majority of the funds into the business will be the major holder of the company.
Mehta can get a good remuneration for running the business for he has the expertise. The minor investors cannot be directly involved in the functioning of the business.
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