If You Buy 50 Percent of a Stock Do You Own That Company?

Owning 50 percent or more of a company's common stock gives you controlling interest in the company. You don't own the company outright, because a company that issues stock is considered publicly owned. In other words, controlling interest gives you the right to control company decision-making, but you still share ownership with other stock holders.

In many cases it isn't necessary to own 50 percent of a company's stock to gain controlling interest. Corporations operate much like a democracy. Common stock owners are given the right to vote for each share of stock they own. To control a company, all you need is to own enough shares to override 50 percent of the vote. Many shareholders don't vote, so in practice, company decisions can be controlled by major shareholders who own less than 50 percent of the company's stock.

A friendly takeover occurs when a company or group of private investors inform the board of directors of their intention to buy controlling interest in their firm. If the board agrees a takeover is in the best interest of their shareholders, they make a recommendation that shareholders accept the offer when it is put up for a vote.

A hostile takeover occurs when the company board of directors does not wish to be acquired by the investors making a bid for controlling interest. In other words, the bidder in a hostile takeover attempts to buy a company that is not for sale. Most large firms don't own enough stock to give them controlling interest in their own firm. Thus, for a hostile takeover to occur, investors must simply buy enough shares on the open market to give them controlling interest.

A reverse takeover occurs when a privately-owned company buys controlling interest in a publicly-traded company for the purpose of merging the two companies. It is very expensive and difficult for a private firm to gain a listing on one of the major stock exchanges. Buying a company that is already listed and merging it with the private company can be a cost-effective way for a private company to gain a listing.