To own a shop is proprietorship. When two or more individuals coming together to carry out a business is a partnership, which requires small capital. To establish a company, desiring persons come together and form a company. Company is to be registered under the Indian Companies' Act, 1956. Persons who form a company are called Promoters and the company is called Limited Company. Amount required to start a company is called Capital. This capital is divided into
small equal parts, each part is of `1, `2, `5, `10 or .100 etc. This small part is called share of the company. These shares are sold in the sharemarket to raise the capital.

Share Holder : A person who owns the share is called a share holder. The shareholder is a part owner of the company in the proportion of number of shares he/she holds.

Stock Exchange : It is a place where buying and selling of shares take place. It is also known as share market or stock market, equity market or capital market. Companies should be listed in the stock market for trading.

Face Value (FV) : The value printed on the share certificate is called the Face value of the share. It is also called Nominal value or Printed value or par value.

Market Value (MV) : The price at which the shares are sold or purchased in the stock market is called Market value (MV) of the share. In the live sharemarket the Market Value changes frequently. If the company's performance is better than expected, then those shares are in demand. The number of shares is fixed, therefore share supply could not be increased and hence the share price increases. If the company is not doing well, the share price falls. [Increase in price is shown by (green triangle upward), and decrease in price is shown by (Red triangle downward).] This is the reason for increase or decrease in SENSEX and NIFTY index.

Dividend : The part of annual profit of a company which is distributed per share among shareholders is called dividend. If the company is performing well then the value of share capital increases hence the price of the share goes up. As a result company gives good devidend. For the sharehlders the devidend income is taxfree.


Share : A share is the smallest unit of the capital. The value of a share is printed on the company's certificate with other details and it is called a share certificate.

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