Question

Write features of shares. 

Answer 1

1.Meaning: -Total share capital of a company is divided into many units of small denominations. Each such unit is called as a share. In other words, a share is small part of the total capital of a company. It is a unit that measures financial interest of its holder in a company. It also gives certain rights to its holder i.e. a shareholder has a right to share the profits of the company throughout its life as well as assets of the company at the time of winding up.

 

Definition: -According to sec.2 (46) of the companies Act, 1956. “A share is a share in the share capital of a company and includes stock except when a distinction between stock and share is expressed or implied” (unspoken). 

Following are the features of shares

3. Face Value: -Each share has a definite face value, say Rs. 10, Rs. 25, Rs. 100 or so. The share has a market value which may be more or less than the face value.            
4. Issue Value: - A Share may be issued at par (exact face Value), at Premium (more than the face value), or at discount (less than the face value)
5. Paid up Value: -Shares may be fully paid-up or partly paid-up. A company can forfeit partly paid-up shares, if calls on shares not paid in time.
6. Distinctive Number: - Each share has a distinctive number. The shares are allotted in lots say 10 shares, 50 shares,100 shares, or so.
7. Ownership: -The owner of the share is called shareholder or member of the company. The shareholders are the owners of the company.
8. Rights: -A share confers certain rights on its holder, such as right to vote at a meeting, right to inspect books of accounts, right to receive dividend, etc.
9. Proof of Title: -The title of a share is evidence by a share certificate, issued by the company under its common seal.
10. Transferability: - The shares of a public limited company are freely transferable. The equity shares of reputed companies can be easily traded on the stock markets.

Income: -The shareholder gets return (income) on investment, called dividend. The dividend on equity shares is not fixed. And that of preference shares is fixed.