SHARES

SHARES

(I) Nature of shares: Section 2(84) of the Companies Act, 2013 defines the term ‘share’which means a share in the share capital of a company and includes stock. A share thus represents such proportion of the interest of the shareholders as the amount paid up thereon bears to the total capital payable to the company. It is a measure of the interest in the company’s assets to which a person holding a share is entitled.

Share is an interest in the company: Farwell Justice, in Borland Trusteesvs. Steel Bors. & Co. Ltd. observed that “a share is not a sum of money but is an interest measured by a sum of money and made up of various rights contained in the contract, including the right to a sum of money of a more or less amount”. You should note that the shareholders are not, in the eyes of law, part owners of the undertaking. The undertaking is somewhat diuerent from the totality of the shareholders. The rights and obligations attaching to a share are those prescribed by the memorandum and the articles of a company. It must, however, be remembered that a shareholder has not only contractual rights against the company, but also certain other rights which accrue to him according to the provisions of the Companies Act.

Shares are a movable property: According to section 44 of the Companies Act, 2013, the shares or debentures or other interests of any member in a company shall be movable property transferable in the manner provided by the articles of the company.

Shares shall be numbered: Section 45 provides, every share in a company having a share capital, shall be distinguished by its distinctive number. This implies that every share shall be numbered.
However, this shall not apply to a share held by a person whose name is entered as holder of beneficial interest in such share in the records of a depository.