When a company is formed, the founders can issue shares (sell percentage ownership) for stock (raised capital for the company from selling shares)

The founders discuss and arrive at the percentage of the ownership of company that each of them will own.

For instance, assume that there are three entrepreneurs who formed the company, they are
Alice, Robert, and Peter – dealing with computer business, known as “ABC Computers”.

The distribution of Ownership between the founders of “ABC Computers”

The initial investment need is $600 (this is only an example for understanding; it can also be $6,000, or even $6 million).

The three entrepreneurs agree on a deal where each of them will invest $200 – which is one- third of the total investment required for the business - and each of them will therefore have one-third ownership of the company.

Also, they decide to issue 600 shares. In understandable terms, each of the owner will get one share for every dollar they invest in to the business.

So, each one of them will get 200 shares each in the company.

Alice therefore has ownership of 200 shares of the total 600 shares of the company.

Similar to Robert and Peter, he also has one third ownership of the company.

If Alice purchases Robert and Peter’s shares, he will be the owner of all of the company’s stock and he will become the sole owner of the company.
In this example, the founders decided to issue 600 shares, which is one share for every dollar invested.

However, they can also issue 1,200 shares, where one share will be valued at $0.50, nothing prevents them doing so. They can divide the ownership as just 3 shares, where one share is $200.

The number of shares issued will be at the complete decision of the founders’ judgment and convenience.

Unconditional of how many shares are issued by the company; each of the investors will still have one third ownership of the company.

Next : Par value (PV)