The capital of the company can be divided into different units with definite valuescalled shares. Thus a share is the shared capital in the firm giving ownership right tothe shareholder.
Types of Shares
There are two types of shares that a company may issue-
A Preference share has following two features-
A right to receive dividend at a given rate or amount before any dividend is paid.
Aright to repayment of capital in the event of winding-up of company.
An Equity share has following features-(i) It gets dividend and repayment after payment to preference shareholders.(ii) Rate of dividend is not fixed and is determined by Directors.(iii) Such shareholders may go without any dividend if no profit is made.(iv) They also have voting rights proportionate to one’s share in the paid-up equity capital
Par value of shares:
An amount is noted on each share of a company. This is known as the par value of theshare. It is also known as the face value of the share.
Market value of Share:
It is the value at which the share is sold or purchased in the market. Market value may be more or less than the face value of the share