What Is A Share And What Kinds Of Shares Are There In Business?

Share: the capital of the joint stock company is divided into various small units each unit is known as a share. It means share is a part of the share capital.

Kinds of Shares:

Ordinary/Common/Equity Shares:

Ordinary shares are also called equity shares. The ordinary shares show the ownership rights in the business. The holders of the ordinary shares are the real owners of the company. The ordinary shareholders have voting rights in the meetings of the company. These shareholders are entitled to receive the dividend from the net profits of the company after the payment of fixed dividend to preferred stock holders. The equity shares are not redeemable during the life time of the company.

Preference Shares:

It is a hybrid form of security, because it combines the feature of stock as well as bonds. Preference shares as the name suggests have certain preference as compared to other types of share. The main preferences of these shareholders over others are as follow:

• Their rate of dividend is fixed
• They get a fixed amount of dividend before the distribution of dividend to other shareholders.
• At the time of winding up of the company, they will be paid back their capital by the company, before the ordinary shareholders.

Portion that one can own in a business