This document defines shares and discusses their key characteristics and types. Shares represent a portion of a company's total share capital and are divided into parts. Each part is called a share. There are two main types of shares: equity shares and preference shares. Equity shares constitute the major portion of a company's shares and holders have voting rights and rights to profits. Preference shares have preferential rights to dividends and repayment of capital over equity shares. Preference shares can be further classified as cumulative, non-cumulative, convertible, redeemable and participating.

1. SHARES
PREPARED BY : KHUSHI GOYAL

2. LEARNING
OBJECTIVES
MEANING AND DEFINITION
OF SHARES
CHARACTERISTICS OR
NATURE OF SHARES
KINDS/TYPES OF SHARES

3. MEANING AND DEFINITION OF SHARES
 MEANING
Basically meaning of 'share' is 'part' or 'portion' . The share
capital of a company is divided into different parts and each
part is called share .
For example : the capital of a company - Rs 400,000 , divided
into 4000 parts each part of Rs 100, then each will be known
as share.
 DEFINITION
According to Section 2 (48) of the Companies Act , 2013
'share' means the portion in the share capital of the company.
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4. CHARACTERISTICS OF SHARES
 Movable property : The shares or interest of any member in
a company is a movable property and can be transferred.
 Share certificate : A company issues a certificate to every
shareholder under the common seal of the company certifying
that he is the owner of the company and this much number of
shares are held by him .
 Registration of shares : The company maintains a register
in which they record the name , address , the number of
shares held and amount by each shareholder .
 Right and interest : A shareholder of a company has certain
rights and interests and at the same time has certain liabilities
.

5. KINDS/TYPES OF SHARES
EQUITY SHARES
PREFERANCE SHARES

6. EQUITY SHARES
 According to Section 43 of the Companies Act , 2013 all shares of a
company which are not preference shares are equity or ordinary shares
. Equity shares constitute the major portion of the shares of the
company having share capital.
 The dividend on equity shares , and the return of capital in case of
winding up of the company is paid on equity shares after it has been
paid on preference shares .
 Equity shareholders have the right to vote , to manage.
 They are the real owners of the company.

7. PREFERENCE SHARES
 These are the shares that have the preferential rights as to the
payment of dividend and return on capital on the winding up of
the company.
 The holders of the preference shares have the prior rights to
receive the dividend at a fixed rate.
 Further types of preference share are as follows:
Cumulative and Non - Cumulative
Convertible and Non - Convertible
Redeemable and Irredeemable
Participating and Non - Participating

8. Continued...
 Cumulative preference shares : shares that have the right to receive
dividend of the preceding years .
 Non-Cumulative preference shares : shares that do not have any right to
receive the dividend of preceding years if not distributed by the company.
 Convertible preference shares : shares that are convertible in nature.
 Non-Convertible preference shares : shares do not have right to get
converted into equity shares.
 Redeemable preference shares : shares which capital can be paid back to
the holders after a specific period of time .
 Irredeemable preference shares : shares that cannot be redeemed.
 Participating preference shares : such shares carry the right to participate
in receiving a share in other profits of the company.
 Non-participating shares : such shares do not carry any right in receiving a
share in other profits of the company.