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Company Law - Shares

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14 views26 pages

Company Law - Shares

Uploaded by

hiphopdevi2222
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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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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