SHARES AND DIVIDENDS

The capital of a company is divided into shares. Each share forms a unit of
ownership in a company and is offered for sale so as to raise capital for the
company. Shares can be broadly divided into two categories: equity and
preference shares. Equity shares give their holders the power to share the
earnings and profits of the company as well as vote in the AGMs of the
company. Such a shareholder has to share the profits and also bear the
losses incurred by the company.

On the other hand, preference shares earn their holders only dividends,
which are fixed, giving them no voting rights. Equity shareholders are
regarded as the real owners of the company. When the shares are offered
for sale directly by the company for the first time, they are offered in the
primary market, whereas the trading of shares takes place in the secondary
market.A dividend refers to a reward, cash or otherwise, that a company
gives to its shareholders. Dividends can be issued in various forms, such
as cash payments, stocks, or any other form. A company’s dividend is
decided by its board of directors, and it requires the shareholders’ approval.
However, it is not obligatory for a company to pay dividends. A dividend is
usually a part of the profit that the company shares with its shareholders.

COMPANY AND COOPERATIVES

Cooperative marketing essentially involves an understanding or an

agreement between two companies aiming to promote or sell the other
companies' products. They also sell their products. The companies within
the agreement do this to complement each other's services. This provides
mutual benefits. Cooperative marketing results from the combined or joint
efforts of two or even more companies. Typically, they bundle and group
the products and services in the hope of reaching a common target
audience. In cooperative marketing, products can complement or even
supplement each other. In some cases, it can cater to different seasonal
cycles.

In the survey done in 1968 of co-operative marketing societies, the

Reserve Bank of India decided to do effective linking of credit with
marketing. This was done to help government agencies execute price
support programs; in this way, the interests of the producers were being
fulfilled.

In India, cooperative marketing was necessary for several reasons.

Rampant malpractices in what was then the agricultural marketing system,
the existence of all manner of intermediaries, and their excessive charges
made this necessary. That earlier system, or lack thereof, meant farmers
owed vast amounts of money to lenders, leaving them, sadly, at their
mercy. Come harvest time. The farmer was routinely forced to sell whatever
product they had to the middlemen at shamefully low prices. Cooperative
marketing societies were a step to overcome those pre-existing problems.

What is interesting about cooperative marketing is that since it is a

voluntary business organization, patrons decide to collectively market
products for the benefit of each of them in a system governed by
democratic principles. The members share all the revenue and savings,
depending on their share.

The members are all owners; they operate and contribute to the
commodities and become direct beneficiaries of savings. They do not have
to worry about intermediaries profiting at their expense. They are assured
of the benefits of large-scale business, which would have been difficult for
them to achieve individually. Here, each producer or member has one vote,
regardless of the number of shares he buys.
Cooperative marketing emphasizes the concept of commercialization,
although the economic motives and characters make it stand apart from
other associations. The method of operation often resembles that of private
businesses, but the differences in their respective reasons are essential.

Types of companies

"The types of companies in the share market can vary based on their
market share goals and strategies. Some companies focus on building
strategies to actively increase market share through new product
introductions and marketing programs, while others use holding strategies
to maintain their existing market share. Additionally, some companies
implement harvesting strategies to achieve high short-term earnings by
allowing market share to decline. These strategies depend on factors like
competitor strength, available resources, and management's willingness to
sacrifice present earnings for future results.

Dividend payment has a significant impact on share price, with companies

that pay higher dividends attracting more investors and increasing their
share value. Companies base their dividend payments on earnings, which
greatly affect share prices. More studies are needed to understand other
factors that influence share prices aside from dividend payments.
Shareholders tend to maintain their shares when there is a decrease in
share price, while an increase in share price may lead to an increase in
share value. The impact of dividend policy on share price remains a
controversial topic in corporate finance, with varying practices across firms
and countries.

SHARE HOLDER

A shareholder is a person or institution that has invested money in a

corporation in exchange for a “share” of the ownership. That ownership is
represented by common or preferred shares issued by the company and
held (i.e., owned) by the shareholder.

Common and preferred shares have different prices, entitle shareholders to

different proportions of the company’s profits, and may or may not come
with voting rights (i.e., the right to participate in company decision-making).

Shareholders of small and medium-sized private companies are often

closely involved in the management of the business. This is much rarer in
larger, publicly traded corporations, where teams of managers are
responsible for day-to-day decisions.

As noted above, a shareholder is an entity that owns one or more shares in

a company’s stock or mutual fund. Being a shareholder (or a stockholder,
as they’re also often called) comes with certain rights and responsibilities.
Along with sharing in the overall financial success, a shareholder is also
allowed to vote on certain issues that affect the company or fund in which
they hold shares.

A single shareholder who owns and controls more than 50% of a

company’s outstanding shares is called a majority shareholder. In
comparison, those who hold less than 50% of a company’s stock are
classified as minority shareholders.
The majority of shareholders are company founders. In older, more
established companies, majority shareholders are frequently related to
company founders. In either case, these shareholders wield considerable
power to influence critical operational decisions, including replacing board
members and C-level executives like chief executive officers (CEOs) and
other senior personnel when they control more than half of the voting
interest. That’s why many companies often avoid having majority
shareholders among their ranks.

Unlike the owners of sole proprietorships or partnerships, corporate

shareholders are not personally liable for the company’s debts and other
financial obligations. Therefore, if a company becomes insolvent, its
creditors cannot target a shareholder’s personal assets.

SHARE CERTIFICATE

A share certificate is a written document signed on behalf of a corporation

that serves as legal proof of ownership of the number of shares indicated.
A share certificate is also referred to as a stock certificate.

When companies issue shares in the market, shareholders who buy in are
issued a share certificate. The share certificate basically acts as a receipt
for the purchase and ownership of shares in the company. The document
certifies registered ownership of shares as of a particular date.

Key information on a share certificate includes:

● Certificate number

● Company name and registration number

 ● Shareholder name and address

● Number of shares owned

● Class of shares

● Issue date of shares

● Amount paid (or treated as paid) on the shares

Sometimes a shareholder with a stock certificate can give a proxy to

another person to vote on the shares in question. Similarly, a shareholder
without a share certificate may give a proxy to another person to allow
them to vote for the shares in question. Voting rights are defined by the
corporation's charter and corporate law.

A share certificate that is damaged, lost, or stolen can be reissued with a

replacement certificate in respect of the same number of shares. The
shareholder in such a case must return the damaged document to the
company before a replacement can be issued. At this time, the shareholder
may also exercise the right to be issued a single certificate or separate
certificates.

Historically, share certificates were required as proof of entitlement to

dividends. Each time a certificate was presented, the receipt for the
payment of dividends was endorsed on the back. This way, all records of
dividend payments were attached to the document.

Whether someone is transferring a stock certificate on death or electronic

shares, the tax implications are the same. That is, you are not liable for
taxes on the shares you inherit when someone dies. But you might be
liable for the taxes if you sell them.
CAPITAL

Share capital is reported by a company on its balance sheet in the

shareholder's equity section. The information may be listed in separate line
items depending on the source of the funds. These usually include a line
for common stock, another for preferred stock, and a third for additional
paid-in capital.

Common stock and preferred stock shares are reported at their par value at
the time of sale. In modern business, the "par" or face value is a nominal
figure. The actual amount received by a company in excess of par value is
reported as "additional paid-in capital."

Share capital is reported by a company on its balance sheet in the

shareholder's equity section. The information may be listed in separate line
items depending on the source of the funds. These usually include a line
for common stock, another for preferred stock, and a third for additional
paid-in capital.

Common stock and preferred stock shares are reported at their par value at
the time of sale. In modern business, the "par" or face value is a nominal
figure. The actual amount received by a company in excess of par value is
reported as "additional paid-in capital."

Share capital is the funding a company has raised through issuing common
or preferred stock. Authorized share capital is the maximum amount of
share capital a company is allowed to raise. Issued share capital is the total
number of shares a company opts to sell to investors. A company that
wants to raise more equity and increase its share capital can do so by
obtaining authorization (from its board of directors and shareholders) to
issue and sell additional shares.
Share capital is the part of a company's equity that it has raised from
issuing common or preferred shares and is different from other types of
equity accounts.

Face Value and Market Value

Face value is a financial term used to describe the nominal or dollar value
of a security, as stated by its issuer. For stocks, the face value is the
original cost of the stock, as listed on the certificate. For bonds, it is the
amount paid to the holder at maturity, typically in $1,000 denominations.
The face value of bonds is often referred to as "par value" or simply "par."

In bond investing, face value (par value) is the amount paid to a bondholder
at the maturity date, as long as the bond issuer doesn't default. However,
bonds sold on the secondary market fluctuate with interest rates. For
example, if interest rates are higher than the bond's coupon rate, then the
bond is sold at a discount (below par).

Conversely, if interest rates are lower than the bond's coupon rate, the
bond is sold at a premium (above par). While the face value of a bond
provides for a guaranteed return, the face value of a stock is generally a
poor indicator of its actual worth.

The face value of a stock or bond does not denote the actual market value.
Market value is determined based on the principles of supply and demand.
In turn, supply and demand are governed by the dollar figure, where
investors are willing to buy and sell the security at a given time. In fact,
depending on market conditions, the face value and market value may
have very little correlation.

In the bond market, interest rates (compared with the bond’s coupon rate)
may determine if a bond sells above or below par. Zero-coupon bonds, or
those where investors receive no interest aside from that associated with
purchasing the bond below face value, are generally only sold below par
because that's the only feasible way an investor can receive a profit.

While face value is the original price of a stock as set by its issuer, market
value is influenced by external supply-and-demand forces. Market value is
the price that the market will bear, and it can differ significantly from a
stock’s initial price. For example, the face value of Apple shares is
$0.00001, while the market value of its shares can fluctuate above $100.

Discount and Premium

The share price of an investment trust can differ from the net asset value
(NAV). If the current share price is above the NAV, the investment trust is
said to be trading at a premium, i.e., it costs more to buy the shares than
the underlying investments are worth. When the share price is below the
NAV, this is known as trading at a discount.

In an economic scheme of things, the government and the RBI leverage

bonds within the open market operations to regulate the current liquidity
and stabilize borrowing and lending rates. However, bonds also play a role
as an investment instrument that offers high returns and hedges against the
falling stock market. If you are an active investor or want to start investing,
bonds are an ideal instrument to ensure portfolio diversification. However,
before you begin your investing journey with bonds, it is vital to familiarize
yourself with certain terminologies, such as premium and discount bonds,
bond par value pricing, and the difference between premium and discount
bonds.

The fundamental reason for bond pricing fluctuations is the demand and
supply and the resulting interest rates of the same. However, the difference
between a bond sold at par, premium, or discount is as follows:

At Premium: This is when the bond you hold has appreciated or increased
from its initial face value. For example, if your bond is trading at a current
price of Rs 1,100, which is higher than other new bonds, you can sell your
bond at a premium (higher than the actual face value of Rs 1,000).

Discount: A discounted bond is when the bond you hold has depreciated
in its face value to increase the overall bond yield. For example, if the bond
you hold is trading at Rs 750 more than the initial issue face value of Rs
1,000, the bond yield will increase, making it a better option for investors
but a loss-making option for you.

DIVIDEND, RATE OF DIVIDEND, AND SALE PROCEED

A dividend is the distribution of a company's earnings to its shareholders

and is determined by the company's board of directors. Dividends are often
distributed quarterly and may be paid out as cash or in the form of
reinvestment in additional stock. A dividend is a reward paid to the
shareholders for their investment in a company’s equity, and it usually
originates from the company's net profits. For investors, dividends
represent an asset, but for the company, they are shown as a liability.
Though profits can be kept within the company as retained earnings to be
used for the company’s ongoing and future business activities, a remainder
can be allocated to the shareholders as a dividend.

The dividend rate is the amount of cash returned by a company to its

stockholders on an annual basis as a percentage of the market value of the
company. The cash returned to investors is called a dividend, hence the
term dividend rate. The dividend rate can be described as the amount of
cash received by a shareholder, divided by the market value of the stock
held by that shareholder. On a per-share basis, the dividend rate is the
amount of the annual dividend per stock, divided by the current price of the
stock.
Dividend Rate = Dividend Per Share / Current Share Price
Sale Proceeds means the net proceeds from the sale and/or realization of the charged
assets (excluding any charged assets that comprise cash) by the realization agent in
accordance with the conditions (after deduction therefrom by the realization agent of its
usual fees and any costs and expenses incurred in connection with the sale of such
charged assets).

Net Asset Sale Proceeds means, with respect to any Asset Sale, Cash payments
(including any Cash received by way of deferred payment pursuant to, or by monetization
of, a note receivable or otherwise, but only as and when so received) received from such
Asset Sale, net of any bona fide direct costs incurred in connection with such Asset Sale,
including (i) income taxes reasonably estimated to be actually payable within two years
of the date of such Asset Sale as a result of any gain recognized in connection with such
Asset Sale and (ii) payment of the outstanding principal amount of, premium or penalty, if
any, and interest on any Indebtedness (other than the Loans) that is secured by a Lien on
the stock or assets in question and that is required to be repaid under the terms thereof
as a result of such Asset Sale.

Retained Asset Sale Proceeds means that a portion of the net proceeds of
a prepayment event pursuant to the clause of such definition is not required
to be applied to prepay the loans pursuant to Section 2.11 due to the
disposition/debt percentage being less than 100%. Asset Sale Proceeds
Account means one or more deposit accounts or securities accounts
holding the proceeds of any sale or disposition of any Notes Collateral.

Equity Issuance Proceeds means, with respect to any Equity Issuance, all
cash and cash equivalent investments received by the Borrower or any of
its Subsidiaries from such Equity Issuance after payment of, or provision
for, all underwriter fees and expenses, SEC and blue sky fees, printing
costs, fees and expenses of accountants, lawyers, and other professional
advisors, brokerage commissions, and other out-of-pocket fees and
expenses actually incurred in connection with such Equity Issuance.

SHARE MARKET
"A share market is a market where shares of publicly traded companies are
bought and sold. It is influenced by factors such as expenses, performance,
and product differentiation, with lower fees and innovative products
attracting more market share.

The stock market allows buyers and sellers of securities to meet, interact,
and transact. The markets allow for price discovery for shares of
corporations and serve as a barometer for the overall economy. Buyers
and sellers are assured of a fair price, a high degree of liquidity, and
transparency as market participants compete in the open market.

Stock markets provide a secure and regulated environment where market

participants can transact in shares and other eligible financial instruments
with confidence, with zero to low operational risk. Operating under the
defined rules as stated by the regulator, the stock markets act as primary
and secondary markets. 6

As a primary market, the stock market allows companies to issue and sell
their shares to the public for the first time through the process of an initial
public offering (IPO). This activity helps companies raise the necessary
capital from investors.

A company divides itself into several shares and sells some of those
shares to the public at a price per share. 6 To facilitate this process, a
company needs a marketplace where these shares can be sold, and this is
achieved by the stock market. A listed company may also offer new,
additional shares through other offerings at a later stage, such as rights
issues or follow-on offerings. They may even buy back or delist their
shares.

Investors will own company shares in the expectation that their share value
will rise, that they will receive dividend payments, or both. The stock
exchange acts as a facilitator for this capital-raising process and receives a
fee for its services from the company and its financial partners. 6
CFA Institute.

Using the stock exchanges, investors can also buy and sell securities they
already own in what is called the secondary market.

CONCLUSION

Shares are units of ownership in a company, divided into equity and

preference shares. Equity shares allow shareholders to share earnings and
profits, while preference shares earn fixed dividends. Dividends are
rewards given to shareholders and are decided by the board of directors.
Cooperative marketing involves agreements between companies to
promote or sell each other's products, providing mutual benefits. In India,
cooperative marketing was necessary to address malpractices in the
agricultural marketing system and excessive charges from intermediaries.
Members share revenue and savings, benefiting from large-scale business
and having one vote.

Companies in the share market can focus on increasing market share

through new product introductions or marketing programs, maintaining
existing market share through holding strategies, or implementing
harvesting strategies to achieve high short-term earnings. Dividend
payments significantly impact share prices, with higher dividends attracting
more investors and increasing share value. Shareholders, who own shares
in a company, have rights and responsibilities, including voting rights and
voting on issues. Majority shareholders, often founders, have significant
power and are not personally liable for a company's debts. Share
certificates serve as legal proof of ownership.