2025 Shareholder's Practical Guide

The stock market enables private companies to raise financing from individual and institutional investors. It is also a place where supply and demand for financial securities are brought together.

Primary Market

A company can choose to raise funds on the stock market as a source of financing. It does this by going public and offering investors shares in the company in exchange for providing financing. If, later, it wishes to raise more funds on the stock market, it may launch a capital increase, i.e. issue additional shares.

This type of financing happens on the primary market, where investors who have confidence in a company’s ability to thrive finance it directly and receive shares in return. They then become shareholders in the company, or co-owners, and accept the associated risks and potential gains.

Secondary Market

Shareholders may sell their shares to other shareholders on the stock market: this is known as the secondary market. Since the shares can be traded on the market, the company is said to be “listed on the stock exchange”. This matching of supply and demand for shares on the secondary market determines the company’s share price.

The primary market is made possible by the existence of the secondary market: the possibility of reselling a share is essential and reflects the share’s liquidity. This guarantees to the very first investors who bought the shares (on the primary market) that they will be able to resell them (on the secondary market).

The stock market therefore plays a key role within the economy, as:

• companies rely on it for part of the capital required for their development;
• shareholders directly finance this growth (on the primary market) and may later exchange their shares (on the secondary market), ensuring that this type of financing for companies can continue.