Sunday, 17 November 2013

Meaning of Share and Share Capital

Share Capital

Sec 2(46) of Companies Act

" 'Share' means share in the share capital of the company"

Share also includes stock except where a distinction is Stock and Share is expressed or Implied.

Their are basically two types of Shares:

  • Preference Share
  • Equity Share 
Preference Share:

Preference Shares are those which carry following preferential rights as to
  1. The payment of dividend at a Fixed Rate.
  2. The Return of Capital on winding up of the Company.
Preference Share holders do not have any voting rights.

Equity Preference Shares:

These are normally risk bearing Shares. Equity Share holders will get dividend and re[payment of capital after meeting the claims of preference share holders.
Equity Shareholders have the right to vote on any resolution placed before the company. The voting right to every shareholder will be proportionate to his shares of the paid up equity capital. 

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