Partnership interests and shares
In one sentenceThe parts of a company's capital: called stakes in limited liability companies and partnerships, and shares in joint stock companies.
Simply put
Both determine your ownership percentage and your right to profits. The difference is that a share is easier to trade and may be listed on the stock market, while the transfer of a stake is usually restricted by the company's contract and the other partners' rights.
Your ownership percentage = number of your stakes or shares ÷ their total. The nominal value written in the contract differs from the market or fair value at which the stake or share may be sold.
Worked example
A limited liability company has capital of 1,000,000 SAR divided into 1,000 stakes, one of the partners owns 250 of them, and the partners decided to distribute 400,000 SAR in profits.
Nominal value per stake: 1,000,000 ÷ 1,0001,000 SAR
Value of the partner's stakes: 250 × 1,000250,000 SAR
His ownership percentage: 250 ÷ 1,00025%
His share of the distributed profit: 400,000 × 25%100,000 SAR
Don't confuse it with
Fair valueNominal value is fixed in the company's contract, while fair value is what the share or stake is expected to sell for today.