What are Shares??
February 16, 08 by FinanceTurfShares represent ownership of a company. When an individual buys shares of a company, they become one of the owners of the company.
Shareholders choose who runs a company and are involved in making decisions, such as whether a business should be sold.
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There are two types of shares which are normally issued:-
a. Equity shares and,
b. Preference shares
Equity shares are the most important source of raising long term capital by a company.
Equity shares represent the ownership of a company and capital raised by it is known as owner’s fund.
Equity shareholders do not get a fixed dividend but are paid on the basis of earnings by the company.
The preference shareholders enjoy a preferential position over equity shareholders.
As compared to the equity shareholders, the preferential shareholders have a preferential claim over dividend and repayment of capital.
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Preference shares are broadly classified as:-
a) Cumulative Preference Shares
b) Non-cumulative Preference shares
c) Participating Preference Shares
d) Non-participating Preference Shares
e) Convertible Preference Shares
f) Non-convertible Preference Shares
g) Redeemable Preference Shares
h) Irredeemable Preference Shares
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