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It is portion of share capital of the company and it includes stock except where a distinction between stock and share is expressed or implied. The owner of the share (Shareholder) has equal claim on the company profit and loss, debtors and the creditors, the ownership of the share holder vary from shareholder to shareholder.

Type of share

1. Preference Shares: Preference shares have preferential rights. It carries preferential rights in respect of dividends at fixed fixed rate. It also carries preferential right in regards to payment of capital on winding up of company. It means the amount paid on preference shares must be paid back to preference shareholders before paying to other shareholder.

Types of Preference Shares

  • Cumulative Preference Shares
  • Non-Cumulative Preference Shares
  • Participating Preference Shares
  • Non-Participating Preference Shares
  • Convertible Preference Shares
  • Non-Convertible Preference Shares
  • Redeemable Preference Share
  • Irredeemable Preference Shares

2. Equity Shares: Equity is an instrument that signifies an ownership position in a corporate, and represents a claim on its proportional share in the corporation’s assets and profits. Ownership in the company as determined by the number of shares owned by the shareholder. Equity shareholders have the voting rights as compare to preference shareholder.

Sweat equity shares

A sweat equity shares is a type of incentive which is given to the Company’s employee for a non – cash consideration, or in some companies according to their norms, it is given at a discount price excluding tax to become a partial owner of a company. The issue of sweat equity shares is authorized by a special resolution passed by the company in the general meeting. The resolution specifies the number of shares, current market price, and consideration, if any and the class or classes of directors or employees to whom such equity shares are to be issued.

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