That's not correct. Alice does not own anymore the shares, only Charlie does. There are 2 steps involved: 1) shares borrowing 2) shares selling Shares borro

That's not correct. Alice does not own anymore the shares, only Charlie does. There are 2 steps involved: 1) shares borrowing 2) shares selling Shares borrowing: Bob will borrow 100 shares from Alice. Bob will have to give Alice a collateral, valued at 100% value of the shares + a percentage. Bob also has to pay a borrowing fee to Alice, daily. At this point, Bob owns the shares, not Alice. Alice does not receive dividends directly from the company that issued the shares and Alice does not have any voting rights. If those shares produce dividends, then Bob has to pay those dividends to Alice. If Alice invests the collateral and that produces profit, Alice needs to pay some of it to Bob. When Bob thinks all is said and done, he has to return 100 shares (not particularly the same shares, but the same type and amount). At that point, Alice will return the collateral. Alice regains the voting rights and will get dividends. Shares selling: Bob sells 100 shares to Chuck. Chuck owns 100 shares (the ones previously owned by Alice), has the voting rights associated with the shares and will receive dividends (if the shares generate that). There are no extra shares generated by this process. Alice is not a person, but a financial institution, most likely a bank. https://www.investopedia.com/terms/s/securitieslending.asp https://www.investopedia.com/terms/s/securitieslending.asp