3 ms·

A share is already just part of the company, a fraction of the company. Or more specifically, a fraction of the outstanding shares. Suppose you buy one share o

A share is already just part of the company, a fraction of the company. Or more specifically, a fraction of the outstanding shares. Suppose you buy one share of a company that has a thousand shares outstanding. You now own one thousandth of the company, or 1/1000 of the company. Suppose instead you buy one thousandth of a share. Now you own a thousandth of a thousandth, 1/1000/1000. Or you can call it a millionth of the company, 1/1000000. It's the same number either way you write it. The point is that a share is already a fraction, and it's no great leap to have a smaller fraction than that.

manarth 6y ago
Shares provide dividable benefits: fractional ownership and fractional dividend payments. They also provide indivisable benefits: the right to vote, and the right to inspect company documents. The solution to owning "a thousandth of a share" is a stock-split, where the smallest fraction is still one share.
- Stratoscope 6y ago
  Ah, thank you for the clarification, that is a nuance I completely missed. A follow-up question since you know more about this than I do: if some number of people each buy a fraction of a share, who gets to vote that share, nobody? Does it become effectively a non-voting share?
  - simondotau 6y ago
    When it comes to fractional shares as a consumer-facing product, I imagine it would be effectively a non-voting share, yes. However the vote could be exercised by whatever entity actually owns the whole share. That would be entirely a decision for the people who chose to divide up the resource. Presumably BH will only accept a single binary vote per share, so it would be up to the owners of the fractional share to agree (or not).
    - eru 6y ago
      You are right that fractional shares typically don't come with voting rights. But: if there was demand, Robinhood could totally offer fractional shares with voting rights. For each vote, there's typically only a finite number of possibilities. So Robinhood could just pool the voting intentions for everyone with factional shares, and then vote the whole shares accordingly. (To be really nice, Robinhood would just own a small handful of extra shares, so that they can round up those pooled votes to full integers.)
  - sagarm 6y ago
    Presumably that's specified in the contract that divides the interest in that share.
  - manarth 6y ago
    A fractional share is a new financial instrument operated by the seller of the fractional share. If you take the example of Robinhood, here's the relevant section[1]. > "I understand that fractional shares within My Account (i) are unrecognized, unmarketable, and illiquid outside the Robinhood platform". Robinhood remain the owner of the share and retain the voting rights. Robinhood's terms describe how they distribute dividends and voting "rights", but this is a commercial agreement between Robinhood and the fractional share buyers, and doesn't invoke the legislation surrounding share ownership. [1] https://cdn.robinhood.com/assets/robinhood/legal/Robinhood%20Customer%20Agreement%20(June%2022)%20(1).pdf https://cdn.robinhood.com/assets/robinhood/legal/Robinhood%2... [Section 27]

manarth 6y ago

Shares provide dividable benefits: fractional ownership and fractional dividend payments. They also provide indivisable benefits: the right to vote, and the right to inspect company documents. The solution to owning "a thousandth of a share" is a stock-split, where the smallest fraction is still one share.

Stratoscope 6y ago
Ah, thank you for the clarification, that is a nuance I completely missed. A follow-up question since you know more about this than I do: if some number of people each buy a fraction of a share, who gets to vote that share, nobody? Does it become effectively a non-voting share?
- simondotau 6y ago
  When it comes to fractional shares as a consumer-facing product, I imagine it would be effectively a non-voting share, yes. However the vote could be exercised by whatever entity actually owns the whole share. That would be entirely a decision for the people who chose to divide up the resource. Presumably BH will only accept a single binary vote per share, so it would be up to the owners of the fractional share to agree (or not).
  - eru 6y ago
    You are right that fractional shares typically don't come with voting rights. But: if there was demand, Robinhood could totally offer fractional shares with voting rights. For each vote, there's typically only a finite number of possibilities. So Robinhood could just pool the voting intentions for everyone with factional shares, and then vote the whole shares accordingly. (To be really nice, Robinhood would just own a small handful of extra shares, so that they can round up those pooled votes to full integers.)
- sagarm 6y ago
  Presumably that's specified in the contract that divides the interest in that share.
- manarth 6y ago
  A fractional share is a new financial instrument operated by the seller of the fractional share. If you take the example of Robinhood, here's the relevant section[1]. > "I understand that fractional shares within My Account (i) are unrecognized, unmarketable, and illiquid outside the Robinhood platform". Robinhood remain the owner of the share and retain the voting rights. Robinhood's terms describe how they distribute dividends and voting "rights", but this is a commercial agreement between Robinhood and the fractional share buyers, and doesn't invoke the legislation surrounding share ownership. [1] https://cdn.robinhood.com/assets/robinhood/legal/Robinhood%20Customer%20Agreement%20(June%2022)%20(1).pdf https://cdn.robinhood.com/assets/robinhood/legal/Robinhood%2... [Section 27]