Learning Materials For Accounting, Management , Finance And Economics.

Monday, April 18, 2011

Meaning And Concept Of Share

Every company should have capital in order to finance its activities. When capital of a company is divided into a number of units of fixed value, then such units are called shares of a company. In other words, a share is one of the units into which the total capital of the company is divided. Share is a fractional part of the total capital of the company. It is the proportional part of the share capital and forms ownership in a company. In other words, a share represents the extent of ownership or interest in the assets and profits of the company.

A share is issued by a company in the form of certificate under its common seal. It is a personal and movable property, which can either be mortgaged or pledged or transferred. It is measured by a sum of money for the purpose of liability and of interest (dividend) of its holder. The persons who contribute money through shares are known a ' shareholders'. A shareholder enjoys certain rights such as right to dividend, right to vote and is liable to pay the unpaid balance on the shares, if any.