Companies Act Section 2(84) Share

Share Section 2(84)

A Share represents the unit of ownership in a company and signifies a shareholder’s proportionate ownership in the company's capital. It is issued by a company to individuals or entities (shareholders) who contribute capital to the company in exchange for ownership rights.

Key Aspects:

1. Types of Shares:

Equity Shares: These are ordinary shares that entitle shareholders to voting rights in company decisions and dividends based on profits.

Preference Shares: These shares carry preferential rights over equity shares, such as a fixed dividend rate, but typically do not include voting rights except in certain exceptional circumstances specified under the law.

Different Classes: Companies may issue shares in different classes, each with specific rights and privileges as determined by the company's articles of association.

2. Ownership and Voting Rights:

Shareholders who hold equity shares have the right to vote on company resolutions, including the election of directors and significant business decisions.

Preference shareholders usually do not have voting rights but are entitled to receive dividends before equity shareholders.

3. Transferability:

Shares are generally freely transferable, subject to any restrictions mentioned in the company’s articles of association or under specific regulatory provisions.

4. Capital Structure:

The issuance of shares forms a crucial part of a company’s capital structure, enabling it to raise funds for business operations, expansions, and investments.

5. Disclosure and Compliance:

Companies must comply with regulatory requirements related to the issuance, transfer, and buyback of shares as stipulated under the Companies Act, 2013, and other applicable laws.

Importance:

Capital Formation: 

Shares enable companies to mobilize capital from investors, fostering business growth and development.  

Corporate Governance: 

Shareholders' rights and responsibilities, including voting rights and entitlement to dividends, promote transparency and accountability in corporate governance.  

Investor Participation: 

Shares provide individuals and institutions with an opportunity to invest in companies and participate in their financial success and decision-making processes.