A short note on company shares

A share in a company is one of the units into which the total capital of the company is divided. For example: If the capital of the company is Rs 10,000 and it is divided into, 1,000 units of Rs 10 each, each unit of Rs 10 shall be called a share of the company. Section 2(46) of the Companies Act defines a share “as a share in the share capital of a company, and includes stock except where a distinc­tion between stock and share is expressed or implied.” But this definition fails to explain the true nature of a share.

The Language of Company Culture | Common Sense

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A share is a fractional part of the capital of the company which forms the basis of ownership of certain rights and interests of a subs­criber in the company. It is not a sum of money but an interest or right measured in a sum of money to participate in the profits made by a company or in the assets of the company when it is wound up. The member does not own an identified part of the company’s under­taking. His interest is something he owns.

Shareholders are not, in the eyes of law part-owners of the undertaking, which is something different from the totality of the shareholdings (R.T. Perumal vs John Deavin). The ownership of the assets rests in the corporate body, and not in the members composing it. A share secures to its owner certain rights and liabilities e.g., right to dividend, right to vote and liability to pay unpaid balance, if any, and to be bound by the provisions of the Articles and Memorandum.


A share is regarded as goods in India (Arjun Prashad vs Central Bank of India). As per Section 82, the shares of any member in a company shall be movable property, transferable in the manner provi­ded by the Articles of the company. By virtue of Section 83 each share in a company having a share capital must bear a distinctive number. Again, each share must have a nominal value, for, ‘no par value’ shares cannot be issued in our country.

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