1. This is my new factory. I’m going to make puzzles.
1. You start by creating a company.
This is my new factory. I’m going to make puzzles.
The name of my company is ‘The really hard puzzle company’.

2. I’m going to split up my company into 100 equal bits.
2. You decide to split up the ownership of your company up into a number of equal bits. Each ‘equal bit’ is called a share.
I’m going to split up my company into 100 equal bits.
There are 100 shares available in ‘The really hard puzzle company’.
Explain to pupils that people do this to raise ‘capital’ (money/funds) to help the company expand. It is a way of turning a smaller company into a bigger company and gives you money to buy new equipment and employ more staff. This should allow you to make more puzzles and therefore get more profit/income for the company itself.

3. I have a controlling interest.
3. You keep some of these ‘shares’ for yourself. You normally keep at least half of the shares. Why?
These are my shares. I’ve decided to keep 51 of the 100 shares available for myself.
I have a controlling interest.
Discuss with pupils the idea of a controlling interest. Why, as the founder of the company would I want this extra share? I talk about board meetings and how they work. What would happen if I gave away more than half on my company in shares? Could this lead to any problems?

4. 4. You sell the remaining shares of your company to other people who might want to invest in your business.
I’ve got 49 shares in my puzzle company left. Does anybody want to buy some of them?
Here is a good opportunity to do some mental maths. Ask pupils questions like ‘If each share was sold to an investor at $2, how much would each person pay for their shares?’ Change the values to match the group. I have also asked pupils to create a tally chart to show this information. Make sure that pupils remember that you still have 51 shares of your own! A B C D
Shareholders

5. 5. Everybody who has purchased ‘shares’ in your company now owns a part of your company.
My company, ‘The Really Hard Puzzle Company’ is owned by 5 people. We all have different amounts of shares in the company.
We all collectively own the factory building, the puzzle making machines and all other equipment.
You may want to ask pupils is this an advantage? What are the downsides to being the owner? A B C D
Shareholders

6. 6. All of your shareholders now own a ‘share’ of everything that the company owns including buildings, machines, equipment.

7. 7. If your company makes any kind of profit, it has to be split into as many equal parts as there are shares. This ‘profit’ is normally given out to shareholders once a year. The payment is called a dividend.
My company made a profit of $500 last year. How much money will each of us get?
To do this, pupils will need to divide the amount of money made by the number of shares (each share is worth $10). They will then need to multiply the number of shares by the amount each is worth. This is a good opportunity for pupils to use the tally chart if they created one earlier on in the lesson. Remember to include the 51 shares the founder of the company has. A B C D
Shareholders

8. 8. As well as sharing in the profits, shareholders are also responsible for anything that causes the company to have to spend money.
You have been selling faulty puzzles with pieces missing. You have been fined $200. How much of the fine will each person have to pay?
Shareholders A B C D
This repeating the same process from the last slide. Pupils can then subtract the fine from their profit to see how much they actually made by the end of the year. Remember to include the 51 shares the founder of the company has.

9. I will buy them. I will give you $6 a share.
9. Your shareholders are free to sell their shares in your company at any time. To do this, they would approach a stockbroker. This is a person whose job is to buy and sell shares in different companies.
I want to sell my 15 shares in the puzzle company. Can you get me the best price possible?
I work in a stock exchange. I will try to sell these shares for the best price that I can.
I will buy them. I will give you $6 a share.
This explains how stocks and shares are traded from one person to another. You could refer back to the first slide. What could happen if I had given away more than half of the shares at the beginning of the process. Talk through the idea of a hostile takeover where someone other than the founder of the company gains the majority of shares. What problems does this cause the founder of the company? E D

10. Stock Markets
These are places where investors can sell their stock in a company to people all over the world. They may chose to reinvest their money into another company.
Click on the picture to go to the webpage of the London Stock exchange. We used the plenary time to look up some companies that they will have heard of and find out the value of their shares.