Definition of Shares | Types of Shares
Definition of Shares | Types of Shares
Definition of Shares
The term share is defined b Section 2 (84) of the Companies Act 2013, ‘Share means a share in the share capital of a company and includes stock’.
A share is a unit by which the share capital is divided. The total capital of company is divided into small parts and each part is called share and the value of each part/unit is known as face value. A share is a small unit of capital of a company. It facilitates the public to subscribe to the capital in a smaller amount.
A person can purchase any number of shares as he wishes. A person who purchases shares of a company is known as a shareholder or a member of that company.
The amount of authorized capital, together with the number of shares in which it is divided, is stated in the Memorandum of Association but the classes of shares in which the company’s capital is to be divided, along with their respective rights and obligations, are prescribed by the Articles of Association of the company. As per Section 86 of The Companies Act, a company can issue two types of shares
(1) Preference shares, and
(2) Equity shares (also called ordinary shares).
