Some basic questions

Question

1. If someone bought 100% shares of a company (I know that it is not so simple to do in practice), can he decide that the company whose shares he bought will pay him salary every month?
2. How is it in the case when one bought not 100% of shares, but just majority of them (for simplicity let's say that every share corresponds to one vote)?
3. Can a majority shareholder demand a dividend?
4. After a company paid dividend the price of its shares is appropriately reduced downward. From what I understand - this reduction refers to the formal price (the one observerd on charts) because if I had shares whose price had been reduced from 30$ to 25$ due to the dividend payment, there would still be nothing enforcing me to sell them at this lower price. I can say that I will sell them only for 30$. Yes? Then, in practice, does the formal share price quickly go up to the previous level after dividend payment?
5. Are there widespread, popular forms of investing in which investors are always paid specific percentage of profit if profit has been made? How about this if we add high security and fairly high percentage conditions?

Answer 1

If someone bought 100% shares of a company (I know that it is not so simple to do in practice), can he decide that the company whose shares he bought will pay him salary every month?

If you successfully bought 100% of the shares of a public company, that company becomes private, and completely yours. You control everything including salary payments. However, having 100% control of a company does not automatically mean that the company has the resources to actually pay you the salary...

How is it in the case when one bought not 100% of shares, but just majority of them (for simplicity let's say that every share corresponds to one vote)?

Let us assume that you have a management job in the company (e.g. as CEO or CFO or director). Depending on how the company was set up (e.g. company constitution, agreements between owners, etc.), you might be able to set your own salary. In most public companies, it is the directors/compensation committee that sets the management's salary. Most jurisdictions have laws to prevent grossly unfair treatment of the minority shareholders, so you might not be able to pay yourself 100% of the profits as your salary.

Can a majority shareholder demand a dividend?

In general, yes. It depends on how the company was set up, and the laws in the jurisdiction.

After a company paid dividend the price of its shares is appropriately reduced downward. From what I understand - this reduction refers to the formal price (the one observerd on charts) because if I had shares whose price had been reduced from 30$ to 25$ due to the dividend payment, there would still be nothing enforcing me to sell them at this lower price. I can say that I will sell them only for 30$. Yes? Then, in practice, does the formal share price quickly go up to the previous level after dividend payment?

For a public company, the stock exchange (or market maker or specialist) automatically reduces the quoted prices by the dividend amount on the ex-dividend date. After that, the price of the shares can be anything, as long as there are people willing to buy/sell at that price. So yes, you can say that you'll only sell at $30 (e.g. using a limit order), but the real issue is whether or not someone else will be willing to buy at $30.

Are there widespread, popular forms of investing in which investors are always paid specific percentage of profit if profit has been made? How about this if we add high security and fairly high percentage conditions?

• Some ETFs are set up to disburse profits. Read their prospectus for details.
• Some REITs promise to disburse profits. Depending on jurisdiction, (a) they may actually be legally required to disburse a minimum percentage of income as dividends, and (b) they may actually have tax incentives to distribute a large percentage. The "payout ratio" represents the percentage of profits disbursed as dividends. For REITs, read the trust management agreement for details about the management's policies.
• For common stocks, management is not obliged to disburse dividends.