Scribd Logo
Upload

Welcome to Scribd!

  • 25 views

    Shares and Its Types

    Uploaded by

    trsrinivasa456
    The document discusses shares and their types. It explains that shares are instruments used by companies to raise capital from investors and represent proportionate ownership. There are two main types of shares - preference shares and equity shares. Preference shares have preferential treatment over equity shares during liquidation. Some common types of preference shares include cumulative preference shares, non-cumulative preference shares, participating preference shares, and redeemable preference shares. Equity shares represent ordinary ownership and provide rights like voting and dividends.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd

    Shares and Its Types

    Uploaded by

    trsrinivasa456
    25 views3 pages
    The document discusses shares and their types. It explains that shares are instruments used by companies to raise capital from investors and represent proportionate ownership. There are two main types of shares - preference shares and equity shares. Preference shares have preferential treatment over equity shares during liquidation. Some common types of preference shares include cumulative preference shares, non-cumulative preference shares, participating preference shares, and redeemable preference shares. Equity shares represent ordinary ownership and provide rights like voting and dividends.

    Original Title

    Shares and Its Types-converted

    Copyright

    © © All Rights Reserved

    Available Formats

    PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    The document discusses shares and their types. It explains that shares are instruments used by companies to raise capital from investors and represent proportionate ownership. There are two main types of shares - preference shares and equity shares. Preference shares have preferential treatment over equity shares during liquidation. Some common types of preference shares include cumulative preference shares, non-cumulative preference shares, participating preference shares, and redeemable preference shares. Equity shares represent ordinary ownership and provide rights like voting and dividends.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    25 views3 pages

    Shares and Its Types

    Uploaded by

    trsrinivasa456
    The document discusses shares and their types. It explains that shares are instruments used by companies to raise capital from investors and represent proportionate ownership. There are two main types of shares - preference shares and equity shares. Preference shares have preferential treatment over equity shares during liquidation. Some common types of preference shares include cumulative preference shares, non-cumulative preference shares, participating preference shares, and redeemable preference shares. Equity shares represent ordinary ownership and provide rights like voting and dividends.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 3

    Course: PGDFM

    Paper I

    Topic: Shares and its Types

    Teacher’s Name: Prof. (Dr.) Reyazuddin

    School: Commerce and Management

    Date: 05/06/2020

    What are Shares and Types of Shares

    To know shares and its types, one must have a basic knowledge about shares and its role in a

    company. Shares are an instrument for raising capital for a business by distributing it to

    investors.

    Shares meaning and Types:

    A share is referred to as a unit of ownership which represents an equal proportion of a

    company’s capital. A share entitles the shareholders to an equal claim on profit and losses of the

    company. There are majorly two kinds of shares i.e. equity shares and preference shares.

    Different types of shares

    As per section 43 of the Companies Act 2013, the share capital of the company is of two types:

    • Preference Share Capital

    Preferential shares are preferential in nature. During the liquidation of the company, the

    shareholders holding preferential shares are paid out first after settling the debts of the creditors

    of the company. Also, preferential shareholders do not have any voting rights. Various types of
    preferential shares are seen based on structure, maturity terms, nature of dividend payment, etc.

    below are some common types:

    o Cumulative Preference Shares:

    ▪ Arrear will be received in subsequent years

    ▪ At the time of inadequate profit, you will not lose anything.

    ▪ The fixed rate of dividend is guaranteed.

    o Non-cumulative Preference Shares:

    ▪ At the time of inadequate profit, they will not get anything.

    ▪ Fixed rate of dividend is guaranteed.

    o Participating Preference Shares

    ▪ Entitled to share the surplus profit

    ▪ Fixed rate of dividend is guaranteed

    o Non-participating Preference Shares:

    ▪ Does not share the surplus profit.

    ▪ Fixed rate of dividend is guaranteed.

    o Convertible Preference Shares

    ▪ It can be converted into Equity shares within a certain period.

    o Non-convertible Preference Shares:

    ▪ It cannot be converted into Equity shares.

    o Redeemable Preference Shares:

    ▪ Shares which a company may repay after a fixed period of time or earlier.

    o Irredeemable Preference Shares:


    ▪ Shares are repayable only at winding up.

    ▪ It does not carry the arrangement for redemption. .

    • Equity Share Capital:

    Equity Shares are also known as ordinary shares. Equity shares are one of the most common

    types of share. These are equal in value and also impart various rights like voting rights,

    dividends, etc. to the shareholders. These shares are traded in stock exchange and are issued at a

    face value.

    You might also like