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Share: Meaning, Definition And Types

Share: Meaning,Definition And Types

Meaning Of Shares

Capital of the company is divided into number of indivisible units of a fixed amount each of which is called shares according to section 2 (84) of the companies act; 2013. Share is a share in the capital of company includes stock except where a distinction between stock and shares express or implied.

The sale of goods act 1930 includes share in the definition of goods .

Features Of Shares

  1. Share is a movable property.
  2. Share is regarded as goods under the Goods Act.
  3. Share gives right and liability to the holder.
  4. Share is different from stock.

Definition Of Share

According to section 2(84) share is share in the capital of company and includes stock except where a distinction is made between stock and share is expressly or impliedly provided.

Definition Under The Sale Of Goods Act; 1913

Share is defined under the sale of goods Act as Goods.

In the case of Borland Trustee Vs . Steel Brothers, 1901.

Justice Farewell  define the term shares as a share is the interest of share holder in the company measured by sum of money for the purpose of liability in the first place and interest of in second place but also consisting of a series of mutual covenant entered into by all the share holder in accordance with the companies act.

Types Of Shares

Under the companies act,2013 A company can issue only two kind of shares:
  1. Preference share capital.
  2. Equity share capital
    1. With voting rights
    2. With differential right as to dividend voting right as to dividend voting or otherwise

Note. However section 50 of companies act provide that a private company which is not a subsidiary of a public company may issue shares of such other kind as it may think fit.

Preference Shares
Preference shares are those which carry a right to be paid affixed amount dividend and a right to be paid the amount of capital in the event of windingup .

Note.The article of the company may provide some other to the preference share holder.

Types Of Preference Share

  1. Cumulative preference shares
  2. Non-cumulative preference shares
  3. Participating preference shares
  4. Non-participating preference shares
  5. Convertible preference shares
  6. Non-convertible preference shares
  7. Redeemable preference shares

Cumulative Preference Shares

These share is entitled to dividend a fix rate .the company phase dividend if it has sufficient profit in case of insufficiency dividend will go on a cumulating till it is fully paid of such arrears are carry forward to the next year and are actually paid of the subcequent year profit .

Non Cumulative Preference Share

Non cumulative preference shares are those shares on which the arrears of dividend do not accumulate if in a particular year there are no profits the share holder shall not get anything.

Participating Preferencial Shares

The holder of such shares are to receive dividend at a fix rate and in addition they have right to participate in the surplus profits along with equity share holder after dividend at a certain rate has been paid to equity share holder. In the event of windingup if there are surplus assets then the holders of such share shall be entitled to share in the surplus assets as well.

Non Participating Preference Share

The holder of such shares are entitled to wholly fixed rate of dividend and do not participate further in surplus profits.

Convertible Preference Shares

These preference shares holder have a right to convert these shares into equity shares within a certain period.

Non Convertible Preference Share

These preference share holder have no right to convert there shares into equity shares.

Redeemable Preferencen Share

A company limited by shares if authorized by its article may issue preference shares which are to be redeemed after a certain fixed period .Thus the amount received on such shares can be returned during the lifetime of the company. subject to condition given under section 55 of companies act.

Equity Shares

Equity shares means all shares which are not preferencial shares.

Written By: Ankit Kumar Yadav
, B.A.Ll.B(Hons.)

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