MEANING OF SHARES

MEANING OF SHARES:

In case of sole proprietorship and partnership there is limit of capital investment in business since in sole proprietor there is only one owner and in case of partnership, there also number of owners are limited. So where there is more capital required or nature of project is very big and that requires huge capital, those requirement demands companies form of organization in which capital is big and number of owners are not limited. According to section 2(84) of the companies act 2013, share means a share in the share capital of a company and includes stock.

SHARE CAPITAL:-Total share capital of company is divided into number of small indivisible units of a fixed amount and each unit is called share.

The fixed value of share printed on the share certificates called Nominal/ Par/ Face value of share. However company can issue share at a price different from face value of share i.e. at discount or premium. E.g. Share having face value Rs 100 can be issued at Rs 50/- premium on one share, so here issue price is Rs 150.

The liability of holder of shares (called shareholders) is limited to issue price of share acquired by them. According to SEBI guidelines, a company is free to price its issue if it has three years track record of consistent profitability and in case of New Company, if it has been promoted by company with a five years tracks record of consistent profitability. Since total capital of company is divided into shares, the capital of the company is called share capital. Document used to invite offer from public to subscribe share and debenture of company is called prospectus.

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