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Company Capital/Shares
Let’s learn more about Company Capital/Shares. The capital of a company is usually divided into certain individual units of a fixed amount as shares. Shares are certificates representing one unit of ownership in a corporation, mutual fund, or limited partnership.
Types of Shares
There are basically two types of shares i.e Equity Shares and Preference Shares.
1. Equity Shares: Equity shares are those shares that are ordinary in the course of company’s business. They are also called as ordinary shares. These shareholders do not enjoy preference regarding payment of dividend and repayment of capital. Equity shareholders are paid dividends out of the profits made by a company. The higher the profits, the higher will be the dividend, and the lower the profits, the lower will be the dividend.
Features of Equity Shares:
- Owned capital
- Fixed value or nominal value
- Distinctive number
- Attached rights
- Return on shares
- Transfer of shares
- Benefit of right issue
- Benefit of Bonus shares
- Irredeemable
- Capital appreciation
2. Preference Shares: Preference shares are those which gives their holders an entitlement to a fixed dividend but which do not usually carry voting rights. Capital stock which provides a specific dividend that is paid before any dividends are paid to common stock holders, and which takes precedence over common stock in the event of liquidation.
Types of Preference shares
- Cumulative Preference shares
- Non-cumulative preference shares
- Participating preference shares
- Non-participating preference shares
- Redeemable preference shares
- Irredeemable preference shares
- Convertible preference shares
- Non-convertible preference shares
