Presented by

Poornima
&
Nanda Kumar
 Definition Of Shares
A share is the interest of a
shareholder in a company. The capital
of a company. Share means share in
the share capital of a company. It
includes stock except where a
distinction between stock and share is
expressed or implied [Sec.2(46)].
 A share has also been defined
as “an interest having a money
value and made up of diverse rights
specified under the Articles of
Association”. And in this sense it
may be defined as a “bundle of
rights and obligations”.
 Kinds Of Shares

 Preference shares &

 Equity shares
 Equity Shares
Equity share are also called common
stock/share or ordinary shares,
investment in share. Equity shares are
considered to be mere risky than both
bonds and preference shares. They,
however, afford greater advantage than
both the other securities and in the capital
market enjoy a better position as for as
the investor attraction is concerned.
 Equity share gives several
rights to shareholders. They
have voting rights, rights of
dividend, the rights of being
offered right shares, the right of
bonus issues and certain tax
benefits.
 Characteristics Of Equity Shares

 Voting rights.
 Ownership rights.
 Par value.
 Right shares.
 Tax benefits.
 Voting rights

A specific right of voting the

members owning equity shares to
receive the notice. Right to be elected
from the members of the executive
committee become the director of
the company on purchasing shares.
 Ownership rights

 The equity share holders are also the

owners of the firm. Each stock holders
receives an ownership right
equivalent to the stock that he holds
in the firm. Every stock holder has the
right to be a member of the company.
 Par Value

An equity share has a face value

or par value. Equity share may also be
sold or issued at a premium or at a
discount but the face value will be
denomination. It shows the liability of
an investor.
 Right shares

The share holders has a right of

receiving additional shares whenever
they were issued by the company.
 Tax Benefits

Up to Rs.7000 interest can be deducted

under section 80c to calculate the total
income of a person. But sometimes when the
company is new, the investor can benefit of
his holding in equity stock of new firms under
section 80cc. Income in the form of dividends
in the new undertakings is deductible before
paying the tax for the first 5 years of the
existence.
Preference Share
 Preference share

 Preference shares capital is the sum of total

of preference share. These shares carry the
following preferential rights over equity
shares.
 As regards dividends, to be paid a fixed
amount or an amount calculated at a fixed
rate.
 On winding up of the company, to return
capital paid up.
 Kinds Of Preference shares

 Cumulative & Non-cumulative

preference shares
 Participating & Non-Participating
preference shares.
 Redeemable & Non-Redeemable
preference shares
 Convertible & Non-convertible
preference shares
 Cumulative preference share

These shares are entitled to fixed

dividends whether there are profits
are no profits. If they are sufficient to
pay dividends in a year, then the
dividends are accumulated and paid
in succeeding year.
Non-cumulative preference share
These types of shares are also
entitled to fixed dividends, but profits
are not sufficient or losses in a
particular year and the dividends are
not declared, these shares are not
entitled to arrears of dividends in
succeeding year.
 Redeemable preference share

Shares which can be purchased back

by the company are called
redeemable preference share. The
company reserves its right to call back
or purchase shares at any time subject
to the articles of association.
Non-Redeemable preference shares

 These shares cannot purchased back

by the company. After the
commencement of the Company's
Act 1998, no company limited by
shares shall issue non-redeemable
preference shares
 Participating & Non-Participating
preference shares
These shares have right to share in the
surplus profits of the company besides
the fixed dividends.
Where as non-participating
preference share does not have right to
share in the surplus profits of the
company besides the fixed dividends.
 Convertible & Non-convertible
preference shares
 These shares may be converted into
equity shares
 Where as non convertible preference
shares cannot be converted into equity
shares.
Thank You