Question

Define shares and discuss the various kinds of shares.​

Answer 1

Answer:

Shares mean a part in the ownership of the company. Issuing shares to the investors and the general public is a method to raise capital for the company and provide the shareholders with a small wedge of ownership in the business. There are various types of share a company can choose to issue to its potential investors.

Answer 2

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❏ The capital of a company is divided into a large number of equal parts or units of small denomination. Each part or unit is called Share.

According to Section 2(84) of the Companies Act, 2013, a share is defined as a share in the share capital of the company and includes stock.

❏ As per provisions of the Companies Act, 2013, a company may issue two types of shares :-

1. Equity Shares

2. Preference Shares.

1. Equity Shares :➔ Equity shares are those shares, the holders of which do not enjoy any special privilege but are entitled to surplus profits or a portion of the same, that may be available after all the preferential rights as to dividend have been met.

2. Preference Shares :➔ Preference shares are those shares that rank fixed dividend out of the profits in priority to any other class of shareholders.