Definition Of Shares

A share is the interest of a

shareholder in a company.
A share is defined as, a share in the share
capital of the company and includes stock
Share

capital of the company is collected by

issue of shares.
Share is one of the units into which total
capital is divided.
The person who owns the share is called
shareholder.

A share has also been

defined as an interest having a
money value and made up of
diverse rights specified under the
Articles of Association. And in
this sense it may be defined as a
bundle of rights and
obligations.

Kinds Of Shares
Preference shares &
Equity shares

Equity Shares
Equity share are also called
common
stock/share
or
ordinary
shares, investment in share. Equity
shares are considered to be mere risky
than both bonds and preference
shares.
They, however, afford greater
advantage than both the other
securities and in the capital market
enjoy a better position as for as the
investor attraction is concerned.

Equity share gives

several rights to
shareholders. They have
voting rights, rights of
dividend, the rights of being
offered right shares, the
right of bonus issues and
certain tax benefits.

Characteristics Of Equity
Shares
Voting rights.
Ownership rights.
Par value.
Right shares.
Tax benefits.

Voting rights
A specific right of voting
the members owning equity
shares to receive the notice.
Right to be elected from the
members of the executive
committee become the
director of the company on
purchasing shares.

Ownership rights
The equity share holders are

also the owners of the firm.

Each stock holders receives an
ownership right equivalent to
the stock that he holds in the
firm. Every stock holder has
the right to be a member of
the company.

Par Value
An equity share has a
face value or par value. Equity
share may also be sold or
issued at a premium or at a
discount but the face value will
be denomination. It shows the
liability of an investor.

Right shares
The share holders has a
right of receiving additional
shares whenever they were
issued by the company.

Tax Benefits
Up to Rs.7000 interest can be deducted
under section 80 to calculate the total income
of a person.
But sometimes when the company is new, the
investor can benefit of his holding in equity
stock of new firms under section 80.
Income in the form of dividends in the new
undertakings is deductible before paying the
tax for the first 5 years of the existence.

Preference Share

Preference share
Preference shares capital is the sum

of total of preference share. These

shares carry the following
preferential rights over equity
shares.
As regards dividends, to be paid a
fixed amount or an amount
calculated at a fixed rate.
On winding up of the company, to
return capital paid up.

Kinds Of Preference shares

Cumulative & Non-cumulative

preference shares
Participating & NonParticipating preference
shares.
Redeemable & NonRedeemable preference shares
Convertible & Non-convertible
preference shares

Cumulative preference share

These shares are entitled
to fixed dividends whether
there are profits are no profits.
If they are sufficient to pay
dividends in a year, then the
dividends are accumulated
and paid in succeeding year.

Non-cumulative preference
share

These types of shares are

also entitled to fixed dividends,
but profits are not sufficient or
losses in a particular year and
the dividends are not
declared, these shares are not
entitled to arrears of dividends
in succeeding year.

Redeemable preference
share
Shares which can be
purchased back by the
company are called
redeemable preference share.
The company reserves its right
to call back or purchase shares
at any time subject to the
articles of association.

Non-Redeemable preference
shares
These shares cannot

purchased back by the

company. After the
commencement of the
Company's Act 1998, no
company limited by shares
shall issue non-redeemable
preference shares

Participating & NonParticipating preference

shares
These shares have right to share
in the surplus profits of the company
besides the fixed dividends.
Where as non-participating
preference share does not have
right to share in the surplus profits
of the company besides the fixed
dividends.

Convertible & Nonconvertible preference shares

These shares may be converted

into equity shares

Where as non convertible
preference shares cannot be
converted into equity shares.

Thank You