Scribd
Upload
27 views2 pages

Difference Between A Share Certificate and A Share Warrant

Uploaded by

nemesisbb01
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
27 views2 pages

Difference Between A Share Certificate and A Share Warrant

Uploaded by

nemesisbb01
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 2

DIFFERENCE BETWEEN A SHARE CERTIFICATE AND A SHARE WARRANT

1. The holder of a share certificate is a registered member of the company whereas the bearer of a
share warrant is not. The bearer of a share warrant can be a member only when the Articles so provide
and only for the purposes defined in the Articles.

2. A share certificate may be issued in respect of partly or fully paid shares, whereas a share warrant
can be issued only when shares are fully paid up.
3. Only public companies are authorised to issue share warrants but share certificates are issued by both public
and private companies.
4. A share warrant is transferable by delivery only and no transfer deed and registration of transfer
with the company is required. But a share certificate is transferred only in pursuance of a transfer deed
along 22 with the delivery of the share certificate. The transfer of a share certificate must be registered
with the company.
5. A share warrant is a negotiable instrument as it is transferable by delivery only. But a share
certificate is not a negotiable instrument.

6. Stamp duty is payable for the transfer of a share certificate but no stamp duty is payable in the
case of transfer of a share warrant.

7. The permission of the Central Government is not necessary for the issue of share certificates but
share warrants can be issued only if allowed by the Articles and with the prior permission of the Central
Government.

8. The holder of a share warrant does not qualify to become a director of the company (where
qualification share is required for directorship). But the holder of a share certificate is so qualified.
9. The petition for the winding up of the company can be presented by the holders of share
certificates only. Holders of shares warrants cannot do so.

10. Payment of dividend on a share warrant is made by way of coupons attached with it. But in the
case of share certificates, the company issues dividend warrants to the holders by name.
EQUITY SHAREHOLDERS v. PREFERENCE SHAREHOLDERS
Definition of Equity Shares: Equity shares are the ordinary shares of the company. The holder of the equity
shares are the real owners of the company, i.e. the number of shares held by them is the portion of their
ownership in the company.
Equity shareholders have some privileges like they get voting rights at the general meeting, they can
appoint or remove the directors and auditors of the company. Apart from that, they have the right to get
the profits of the company, i.e. the more the profit, the more is their dividend and vice versa. Therefore,
the number of dividends is not fixed. This does not mean that they will get the whole profit, but the
residual profit, which remains after paying all expenses and liabilities on the company.
Basis of Equity Shares Preference Shares
Comparison
Definition Equity shares are ordinary shares of a Preference shares are ones that carry
company that represent ownership of the preferential rights in terms of dividend
company. payment and repayment of capital.
Rate of In the case of equity shares, the dividend Preference shareholders receive
Dividends rate is not fixed. The board of directors dividends at a fixed rate predefined at a
decide dividend rates for equity standard share price value.
shareholders after analysing the company's
performance in the past financial year.
Bonus Shares Equity shareholders are entitled to receive Preference shareholders are not entitled
bonus stocks from the company. to receive bonus shares.
Voting Rights Equity shareholders enjoy the right to vote Preference shareholders do not have
and participate in the company's decision- voting rights.
making process.
Redemption Equity stocks cannot be redeemed Preference shares can be redeemed after
throughout the company’s lifetime. a certain period or after the company
successfully achieves desired goals.

Capital Equity shareholders receive capital Preference shareholders receive their


Repayment repayment at the time of liquidation of the capital repayment before equity
company and are the last ones to receive shareholders.
it.
Risk Equity shareholders are at high risk in In comparison to equity shareholders, the
comparison to preference shares. risk is low in the case of preference
shareholders.
Role in Equity shareholders are part owners and Preference shareholders do not enjoy any
Management have the right to participate in company advantage in terms of role in
management. management.
Convertibility Equity shares cannot be converted into Preference shares are convertible and can
preference shares. be converted into equity shares.
Cost Lower costs of equity shares make them The price range of preference shares is
easily accessible to any investor, higher, making them accessible only to
specifically small investors. medium and large investors.
Arrears of Equity shareholders cannot claim arrears Preference shareholders can avail arrears
Dividend of dividends. of dividends along with dividends of the
current year.
Capitalisation In the case of equity shares, there is a high Preference shares have a relatively lesser
chance of over-capitalisation. chance of over-capitalisation.
Financing Equity shares serve as means for long-term Preference shares serve as means for
Terms financing. mid-term and long-term financing.
Investment Equity shares have lower denominations. Most preference shares come with high
Denomination denominations.
Mandate to It is mandatory for companies to issue It is not mandatory for every company to
Issue equity share capital. issue preference share capital.
Financing Payment of equity dividends is optional Payment of preferred dividends is an
Burden and depends on the company's profit. obligation for the company.

You might also like