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    Company Law - Shares

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    Shweta Bharti
    Shares represent a portion of ownership in a company. There are different types of shares such as equity shares, preference shares, deferred shares, and stock. Equity shares represent ownership and voting rights, while preference shares provide preferential dividend rights but no voting rights. Shares can be converted to stock after being fully paid, with stock having no definite number and being more easily transferable. Both shares and stock represent partial ownership in a company.

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    Company Law - Shares

    Uploaded by

    Shweta Bharti
    56 views25 pages
    Shares represent a portion of ownership in a company. There are different types of shares such as equity shares, preference shares, deferred shares, and stock. Equity shares represent ownership and voting rights, while preference shares provide preferential dividend rights but no voting rights. Shares can be converted to stock after being fully paid, with stock having no definite number and being more easily transferable. Both shares and stock represent partial ownership in a company.

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    Shares represent a portion of ownership in a company. There are different types of shares such as equity shares, preference shares, deferred shares, and stock. Equity shares represent ownership and voting rights, while preference shares provide preferential dividend rights but no voting rights. Shares can be converted to stock after being fully paid, with stock having no definite number and being more easily transferable. Both shares and stock represent partial ownership in a company.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    56 views25 pages

    Company Law - Shares

    Uploaded by

    Shweta Bharti
    Shares represent a portion of ownership in a company. There are different types of shares such as equity shares, preference shares, deferred shares, and stock. Equity shares represent ownership and voting rights, while preference shares provide preferential dividend rights but no voting rights. Shares can be converted to stock after being fully paid, with stock having no definite number and being more easily transferable. Both shares and stock represent partial ownership in a company.

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    SHARES

    • MEANING

     The literal meaning of ‘share’ is ‘part’ or ‘portion’. But in the context of share-capital of a compan
    share has a different meaning .
     It can be said that every part of joint capital of a company is a ‘share’, By acquiring the share of a
    company, any individual can become company’s shareholder.
    • CHARACTERISTICS

     Movable Property
     Number
     Share Certificate
     Registeration of Share
     Right and Interest
     Passive Property
    1. MOVABLE PROPERTY

     The share or other interest of any member if company is movable property and company is
    transferable in the manner provided by the article of the company .
    2. NUMBER

     Each share in the company having a share capital is ditinguished by its appropriate
    number.
    3. SHARE

     Every shareholder is issued a certificate under the common seal of the company certifying
    in the number of shares held by him . This is called share certificate .
    4. REGISTERATION OF SHARE

     The comapany maintains a register of its member in which the name, address, the number
    of share held, and the amount paid on each share by every holder of the company’s share
    is recorded .
    5. RIGHT AND INTEREST

     A shareholder of the company has certain rights and interest and, at the same time, has
    certain liabilities . A share is not merely an amount of money; it is a right of holder
    which is measured in terms of money and constitutes certain rights and obligations .
    6. PASSIVE PROPERTY

     A share is a symbol of ‘passive’ property . The ‘active’ property is in the possession of the
    company .
    • TYPES OF SHARES
    • EQUITY SHARES

     An equity share, normally known as ordinary share is a part ownership where each
    member is a fractional owner and initiates the maximum entrepreneurial liability
    related to a trading concern . These types of shareholders in any organization possess
    the right to vote .
    • FEATURES OF EQUITY SHARES
    CAPITAL

     Equity share capital remains with the company. It is given back only when the company
    is closed.
     Equity Shareholders possess voting rights and select the company’s management.
     The dividend rate on the equity capital relies upon the obtainability of the surfeit
    capital. However, there is no fixed rate of dividend on the equity capital.
    • TYPES OF EQUITY SHARE
    • PREFERENCE SHARE

     Preference shares, also known as preferred stock, is an exclusive share option which
    enables shareholders to receive dividends announced by the company before the equity
    shareholders.
     Preference shares provide the shareholders with the special right to claim dividends
    during the company lifetime, and also with the option to claim repayment of capital, in
    case of the wind up of the company.
    • FEATURES OF PREFERENCE SHARES

     Preferential dividend option for shareholders.


     Preference shareholders do not have the right to vote.
     Shareholders have a right to claim the assets in case of a wind up of the company.
     Fixed dividend payout for shareholders, irrespective of profit earned.
     Acts as a source of hybrid financing.
    • TYPES OF EQUITY SHARE
    • DIFFERENCE
    • DEFERRED SHARES

     Deferred shares are also called as founder shares because these shares were
    normally issued to founders. The shareholders have a preferential right to
    get dividend before the preference shares and equity shares. No Public
    limited company or which is a subsidiary of a public company can issue
    deferred shares. This shares are issued to the founder shares to control over
    the management by the virtue of their voting rights.
    • STOCK

     Stock is a type of investment that is done by individuals and businesses when they
    invest their money in business ventures in order to get a higher return on their
    investment. When stock is bought it means that an individual possessing that stock is
    possessing a part of the company whose stock was purchased.
    • CHARACTERISTICS OF STOCK

     A company cannot invite the public to buy its stock.


     Only fully paid up share of a company can be converted into its stock .
     The stock has no definite number.
     The stock-holder of a company is paid a dividend by the company.
     The company’s articles must have a provision to convert share into stock.
    • CONVERSION OF SHARE INTO
    STOCK

     When a company has received the fully paid value of its share, it can convert the amount
    received into it’s ‘stock’ of a company represents the value of its fully paid shares, which
    the company can divide into smaller parts of any amount so that the shares of a company
    are easily transferable. It is, therefore that each part of stock is ’share’.
    • PROCEDURE OF CONVERTING
    SHARE INTO STOCK

     To pass a resolution in the meeting of shareholders.


     Information of conversion to the registrar.
     To make alteration in the articles.
     To close transfer books and to inform the shareholders.
     To issue stock certificate and prepare register.
     Transfer of stock.
    • DIFFERENCE
    • VOTING RIGHTS OF PREFERENCE
    SHAREHOLDERS

     As a general rule, the holder of preference share have no voting right; but, in the
    following situtations
    1. Issue related to their interest
    2. Non payment of Dividend
    • VOTING RIGHTS OF EQUITY
    SHAREHOLDER

     Every equity shareholder has right to vote on every resolution placed before the company
    at any meeting. Also the voting right of every equity shareholder is proportionate to his
    contribution to paid-up capital of the company.

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