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Types of Shares

This document discusses types of shares that can be issued by companies according to Section 43 of the Companies Act, 2013. It describes shares as units into which total company capital is divided. There are two main types of shares - preference shares and equity shares. Preference shares carry preferential rights to dividends at a fixed rate and repayment of capital before equity shares in the event of liquidation. Equity shares do not have preferential rights and shareholders receive variable dividends after preference shareholders. The document provides details on different types of preference shares such as cumulative, non-cumulative, participating, and redeemable shares.

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CHHAVI KIRAN
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215 views9 pages

Types of Shares

This document discusses types of shares that can be issued by companies according to Section 43 of the Companies Act, 2013. It describes shares as units into which total company capital is divided. There are two main types of shares - preference shares and equity shares. Preference shares carry preferential rights to dividends at a fixed rate and repayment of capital before equity shares in the event of liquidation. Equity shares do not have preferential rights and shareholders receive variable dividends after preference shareholders. The document provides details on different types of preference shares such as cumulative, non-cumulative, participating, and redeemable shares.

Uploaded by

CHHAVI KIRAN
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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B.

Com II
Semester 3
Cor porate Accounting
Instructor
Ms. Chhavi Kiran
A s s i s t a n t P r o f e s s o r, D e p a r t me n t o f C o mme r c e
Sanatan Dharma College, Ambala Cantt., Haryana
TOPIC
ISSUE OF SHARES
WHAT IS A SHARE?

• Total capital of the company is divided into units of


small denominations.
• Each unit is called a ‘share’
NATURE OF SHARES

• Movable property
• Transferable
• It consists of bundle of rights and obligations
• Must be numbered
TYPES OF SHARES
Section 43 of The Companies Act, 2013

Preference Equity
shares shares
PREFERENCE SHARES
According to Section 43 of The Companies Act, 2013, a preference
share is one, which fulfils the following conditions :
• That it carries a preferential right to dividend to be paid either as a
fixed amount payable to preference shareholders or an amount
calculated by a fixed rate of the nominal value of each share before
any dividend is paid to the equity shareholders.
• That with respect to capital it carries or will carry, on the winding
up of the company, the preferential right to the repayment of capital
before anything is paid to equity shareholders
Cumulative preference shares

Non-cumulative preference
shares

Participating preference shares

Non-participating preference
Types of shares
Preference shares Redeemable preference shares

Irredeemable preference shares

Convertible preference shares

Non-convertible preference
shares
EQUITY SHARES
• According to Section 43 of The Companies Act, 2013, an
equity share is a share which is not a preference share.
• The shares which do not enjoy any preferential right in the
payment of dividend or repayment of capital, are termed as
equity/ordinary shares.
• The equity shareholders are entitled to share the distributable
profits of the company after satisfying the dividend rights of
the preference share holders.
• The dividend on equity shares is not fixed and it may vary
from year to year.
THANK
YOU

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