SHARES - MEANING , DEFINITION , CHARACTERISTICS AND ITS TYPES.

Shares - meaning of shares,definition , its characteristics and types/kinds of shares.

1. SHARES PREPARED BY : KHUSHI GOYAL

2. LEARNING OBJECTIVES

3. MEANING AND DEFINITION OF SHARES MEANING    Basically meaning of 'share' is 'part' or 'portion' . The share capital of a company   is divided into different parts and each part is called share .  For example : the capital of a company - Rs 400,000 , divided into 4000 parts   each part of Rs 100, then each will be known as share.   DEFINITION   According to Section 2 (48) of the Companies Act , 2013 'share' means the portion in the share capital of the company. This Photo by Unknown author is licensed under CC BY-SA .

4. CHARACTERISTICS OF SHARES Movable property : The shares or interest of any member in a company is a movable property and can be transferred. Share certificate  : A company issues a certificate to every shareholder under the common seal of the company certifying that he is the owner of the company and this much number of shares are held by him . Registration of shares  : The company maintains a register in which they record the name , address , the number of shares held and amount by each shareholder . Right and interest : A shareholder of a company has certain rights and interests and at the same time has certain liabilities .

5. KINDS/TYPES OF SHARES

6. EQUITY SHARES According to Section 43 of the Companies Act , 2013 all shares of a company which are not preference shares are equity or ordinary shares . Equity shares constitute the major portion of the shares of the company having share capital.  The dividend on equity shares , and the return of capital in case of winding up of the company is paid on equity shares after it has been paid on preference shares . Equity shareholders have the right to vote , to manage. They are the real owners of the company.

7. PREFERENCE SHARES These are the shares that have the preferential rights as to the payment of dividend and return on capital on the winding up of the company. The holders of the preference shares have the prior rights to receive the dividend at a fixed rate. Further types of preference share are as follows:

8. Continued... Cumulative preference shares : shares that have the right to receive dividend of the preceding years . Non-Cumulative preference shares : shares that do not have any right to receive the dividend of preceding years if not distributed by the company. Convertible preference shares : shares that are convertible in nature. Non-Convertible preference shares : shares do not have right to get converted into equity shares. Redeemable preference shares : shares which capital can be paid back to the holders after a specific period of time . Irredeemable preference shares  : shares that cannot be redeemed. Participating preference shares : such shares carry the right to participate in receiving  a share in other profits of the company. Non-participating shares : such shares do not carry any right in receiving a share in other profits of the company.