DEFINITION AND NATURE OF SHARES

• DEFINITION AND NATURE OF SHARES
  COMPANY LAW
• MEANING OF SHARE

1. THE WORD SHARE ORDINARILY MEANS A PART OR DEFINITE PORTION OF A THING OWNED BY NUMBER OF PERSONS IN COMMON. IT IS DEFINITE PORTION OF THE CAPITAL.
2. SHARE IS THE PART OF OR PORTION OF SOMETHING WHICH IS ALLOTTED OR BELONGS TO INDIVIDUAL.
3. ACCORDING TO SECTION 2( 84) OF THE COMPANIES ACT 2013,SHARES MEANS A SHARE IN THE SHARE CAPITAL OF A COMPANY AND INCLUDES STOCK.
4. A SHARE MEANS A SHARE IN THE CAPITAL OF THE COMPANY.IT IS TANGIBLE PROPERTY.
5. MEANING
6. THE CAPITAL OF A COMPANY IS DIVIDED INTO NUMBER OF SMALL UNITS. EACH UNIT IS CALLED SHARE. A SHARE IS NOT SUM OF MONEY BUT AN INTEREST OR RIGHT TO PARTICIPATE IN A PROFIT MADE BY THE COMPANY OR IN THE ASSETS OF THE COMPANY WHEN IT IS WOUND UP.
7. A SHARE SECURES TO ITS OWNER ( SHAREHOLDER) CERTAIN RIGHTS AND LIABILITIES

• FEATURES OF SHARE

1. SHARE IS DEFINITE PART OF THE AUTHORIZED SHARE CAPITAL
2. SHARE IS MOVABLE PROPERTY TRANSFERABLE IN THE MANNER PROVIDED BY THE ARTICLES
3. IT IS SERIALLY NUMBERED SO THAT THE SHARES HELD BY EACH MEMBER MAY BE EASILY IDENTIFIED.
4. IT CARRIES WITH THE RIGHTS AND OBLIGATIONS OF THE SHAREHOLDER WHICH REMAINS THE SHARES OF THE COMPANY DURING ITS SUBSISTENCE
5. HE MERELY ACQUIRES RIGHT TO SHARE IN THE PROFIT OF THE COMPANY AND BEARS TO THE LOSSES TO THE EXTENT INDICATED THEREIN.

• NATURE OF SHARE

1. AS PER SECTION 44 OF THE COMPANIES ACT 2013. THE SHARES OR DEBENTURES OR OTHER INTEREST OF ANY MEMBER IN COMPANY SHALL BE MOVABLE PROPERTY TRANSFERABLE IN THE MANNER PROVIDED BY THE ARTICLES OF THE COMPANY.
2. IN INDIA SHARE IS REGARDED AS GOODS.
3. SALE OF GOODS DEFINE GOODS AS INCLUDING EVERY KIND OF MOVABLE PROPERTY.
4. HENCE SHARES IN COMPANY IN INDIA ARE GOODS AND NOT MERE CHOSE IN ACTION.

• NATURE OF SHARE

• LORD M. R.GREENE, A MAN’S MOVABLE PROPERTY IS OF TWO KINDS:

1. CHOOSE –IN –POSSESSION: MEANS PROPERTY WHICH YOU HAVE IN YOUR CONTROL AND IN YOUR ACTUAL PHYSICAL POSSESSION
2. CHOOSE-IN-ACTION:- MEANS PROPERTY OF WHICH YOU DO NOT HAVE IMMEDIATE POSSESSION BUT YOU HAVE A RIGHT TO IT,WHICH CAN BE ENFORCED BY LEGAL ACTION.

a)    A SHARE IN A COMPANY IS CHOSE IN ACTION I.E PROPERTY OF WHICH ONE DOES NOT HAVE IMMEDIATE POSSESSION BUT HAS A RIGHT TO IT WHICH CAN BE ENFORCED BY LEGAL ACTION AND SHARE CERTIFICATE IS THE EVIDENCE OF IT.

b)    SHARES  ARE NOT GOODS IN THE ORDINARY SENSE OF THE WORD

c)    SHARES ARE A PECULIAR KIND OF MOVABLE PROPERTY WHICH CAN NOT PASS FROM HAND TO HAND LIKE BALES OF COTTON

d)    THE PROPERTY IN THESE SHARES BELONGED TO THE REGISTERED SHAREHOLDERS AND COULD NOT BE TRANSFERRED TO ANOTHER EXCEPT ACCORDING TO THE ARTICLES OF THE COMPANY

• NUMBERING OF SHARES ( SECTION 45)

1. EVERY SHARE IN COMPANY HAVING A SHARE CAPITAL SHALL BE DISTINGUISHED BY ITS DISTINCTIVE NUMBERS
2. BUT  THESE PROVISIONS WILL NOT BE APPLICABLE SHARES HELD BY A PERSON WHOSE NAME IS ENTERED AS HOLDER OF BENEFICIAL INTEREST IN SUCH SHARE IN THE RECORDS OF A DEPOSITORY