Kinds of Shares - Share Capital, Company Law B Com Notes | EduRev

Company Law

B Com : Kinds of Shares - Share Capital, Company Law B Com Notes | EduRev

The document Kinds of Shares - Share Capital, Company Law B Com Notes | EduRev is a part of the B Com Course Company Law.
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Meaning and Nature of a Share

Section 2(84) of the Act defines a share as “a share in the share capital of a company, and includes stock except where a distinction between stock and shares is expressed or implied.

Nature of a Share

  1. A share is a right to a specified amount of the share capital of a company, carrying with it certain rights and liabilities while the company is a going concern and in its winding up. (Halsbury's Laws of England)
  2. A share is the interest of a shareholder in the company measured by a sum of money, for the purposes of liability in the first place, and of interest in the second, but also consisting of a series of mutual covenants entered into by all the shareholders inter se. [Borland’s Trustee v. Steel Bros., (1901)].
  3. A share is a right to participate in the profits made by a company, while it is a going concern and declares a dividend and in the assets of company when it is wound up [Bacha Guzdar v. CIT 57 Bom. L.R. 617 (SC)].
  4. A share is not a sum of money but a bundle of rights and liabilities; it is an interest measured by a sum of money. These rights and liabilities are regulated by the articles of a company.
  5. Section 44 of the Companies Act provides that a share or other interest of any member in a company is a movable property transferable in the manner provided by the articles of the company.
  6. In India, a share is regarded as goods. According to the Sale of Goods Act, 1930, “Goods” means any kind of movable property other than actionable claim and money, and includes stock and shares.
  7. According to Section 45 of the Companies Act, 2013 every share in a company having a share capital shall be distinguished by its distinctive number but this provision shall not apply to a share held by a person whose name is entered as holder of beneficial interest in such share in the records of a depository.

Kinds of Shares

Section 43 of the Companies Act, 2013 permits a company limited by shares to issue two classes of shares, namely:

(a) Equity share capital—

  1. with voting rights; or
  2. with differential rights as to dividend, voting or otherwise in accordance with such rules as may be prescribed.

(b) Preference Share Capital.

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