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V A share in the share capital of a company, and
includes stock except where a distinction
between stock and share is expressed or
implied.

V In other words, a share in a company is one of

the units in which the total capital of the
company is divided.

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V {xample: If the capital of a
company is  and is divided
into  
 of  each,
each unit of  shall be called
a share of the company.

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›: As to the payment of dividend at a fixed rate
during the life of the company.
2: As to the return of capital winding up of the
company.
V If any share carry only one of above these two
preferential rights, they will be treated as
equity shares.

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V hey do not enjoy normal voting right like
equity share holders, they are however entitled
to vote in following two cases:
V When any resolution directly affecting their
rights is to be passed.
V When the dividend due (whether declared or
not) on their preference shares or part thereof
has remain unpaid.


V Jumulative preference shares
V Non-cumulative preference shares
V Participating preference shares
V Non-participating preference shares
V Jonvertible preference shares
V Non-convertible preference shares
V Redeemable preference shares
V Irredeemable preference shares

-
›
R hese shares carry the right to receive the
whole of surplus profits after the preference
shares, if any.
R Further, directors have the sole right of
recommending dividends to such shares and as
such they may not get any dividends in case
the director choose so.
R olders of equity shares are the actual owners
of the company.

››
D hey have voting rights in the meeting of the company.
D hey have a control over the working of the company.
D {quity share holders are paid dividend after paying it to
the preference share holders.
D he rate of dividend on these shares depends upon the
profits of the company. hey may be paid a higher rate of
dividend or they may not get anything.
D hese share holders take more risk as compared to
preference share holders.
D {quity capital is paid after meeting all other claims
including that of preference share holders.
D hey take risk both regarding dividend and return of
capital.
D {quity share capital can not be redeemed during the life
time of the company.

›

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D hey are also known as ´founder shares", since
they are often held by the promoter of the
company.
D hey are issued as other ordinary shares and
gets a fixed dividends just like preference
shares.
D But they are the last to receive both as regards
dividends and repayment of capital.

›
D Jertain restriction on public companies
regarding allotment of shares, may be
discussed under the following heads:
D When no public offer is made
D When public offer was made

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D Where a public company having a share capital
does not offer shares to the public, it need not
issue a prospectus. In such case it shall not
proceed to allot shares unless at least three
days before the first allotment it has filed with
the registrar for registration a statement in lieu
of prospectus.

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V In case when public company offers shares to
the public for subscription, the provisions
relating to allotment may be studied under the
following heads:
V First allotment of shares
V 6ubsequent allotment of shares

›
‘ A public company can make the first allotment
only after two years of the formation of the
company, and should comply with certain
restrictions:
‘ Registration of the prospectus
‘ Minimum subscription
‘ Application money
‘ {ffect of irregular allotment
‘ 6hares to be dealt in on a stock exchange

›-
V In case of subsequent allotment of shares
Offered to the public for subscription by a
public company, all the special provisions
applicable to ¶first allotment of shares·
discussed above apply, except the provision
relating to:
V Minimum subscription [sec, 69(›)], and
V Deposit of application money in a schedule
bank

V 6hares can be issued at par

V 6hares can be issued at premium

V 6hares can be issued at discount

›
V {very person whose name is entered as a
member of a company has a right to receive a
certificate of his share.
V A share certificate shall be under the seal of the
company and shall specify:
V he shares to which it relates
V he amount paid up thereon
V he name, address, and occupation of the share
holder.
V 6hould be signed by atleast 2 directors and
secretary.

V A share warrant is a document issued by a
public company stating that its bearer is
entitled to the shares specified therein.
V A public company limited by shares may
convert its fully paid-up shares into share
warrants.
V Advantage of issuing share warrants is that
shares can be transferred by mere delivery of
warrant.

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V Issue Receipt / acknowledgement
V Use the prescribed format of covering letter
V bear a unique serial number
V Must affix date receipt stamp
V 6hall return share certificates and transfer with
prescribed time of one month


V Not impound certificates
V Dispatch after realization of the stock invest
V {nsure adequate security marks
V 6ignature difference
- Original transfer deed
- Original Jertificate
- Original objection memo with the
reason

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