According to section 2(84) of the Companies Act 2013, Share means, a share in the share capital of the company and includes stock. A share is referred as a unit of ownership which represents an equal proportion of a company’s capital. A company issues shares to the public, when it needs to raise funds for various reasons. When a person buys shares of a company, he becomes an owner of a part of that company. The different types of shares given in aforesaid image

1) Equity shares

Equity share capital with reference to any company limited by shares, means all share capital which is not preference share capital. It is further classified into the following types:

• With voting rights

These shares are the Ordinary Equity Shares. The Equity shareholders enjoy rights such as right to dividend, bonus shares, voting etc.

• Voting rights/Differential voting rights

These shares come with voting rights that are not equal to ordinary equity shares. The holders of these shares enjoys all other rights such as bonus shares, rights shares etc., which the holders of equity shares are entitled to, subject to the differential rights with such shares that have been issued.

2) Preference Shares

The preference shares are those which have some preferential rights over the other types of shares. This shares give the right to dividends and winding up benefits ahead of equity shareholders. They get fixed dividend each year. They do not enjoy voting rights (or only have a vote only when their dividend is in arrears). It is further classified into the following types:

• Cumulative preference shares

1. Fixed rate of dividend
2. Arrears if any will receive in subsequent year
3. During inadequate profit, dividend gets accumulated to the subsequent year

• Non- Cumulative preference shares

1. Fixed rate of dividend
2. During inadequate profit, they will not receive anything
3. Dividends cannot be carried forward

• Participating preference shares

1. Fixed rate of dividend
2. Share in surplus profit if any left after equity shareholders claim

• Non-participating preference shares

1. Fixed rate of dividend
2. Not entitled to share in surplus profit if any left after equity shareholders claim

• Convertible preference shares

1. Holder has the right to convert it into equity shares after certain period

• Non-convertible preference shares

1. Holder do not has the right to convert it into equity shares after certain period

• Redeemable preference shares

1. Issued for a fixed term and are paid off after/before the expiry of the term or during the lifetime of the company

• Irredeemable preference shares

1. It can be only redeem during winding up
2. There is no provision for the arrangement of redemption

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