For the cumulative total shares of a corporation, see Share capital
"Shares" redirects here. For other uses, see Share
In financial markets
, a share
is a unit used as mutual funds
, limited partnerships
, and real estate investment trusts
. Share capital
refers to all of the shares of an enterprise. The owner of shares in the company is a shareholder
(or stockholder) of the corporation.
A share is an indivisible unit of capital, expressing the ownership relationship between the company and the shareholder. The denominated value of a share is its face value, and the total of the face value of issued shares represent the capital of a company,
which may not reflect the market value of those shares.
A share certificate from 1936 entitling the holder to shares in Greyhound Lines
The income received from the ownership of shares is a dividend
. There are different types of shares such as equity shares, preference shares, deferred shares, redeemable shares, bonus shares, right shares, and employee stock option plan shares.
Shares are valued according to the various principles in different markets
, but a basic premise is that a share is worth the price at which a transaction would be likely to occur were the shares to be sold. The liquidity
of markets is a major consideration as to whether a share is able to be sold at any given time. An actual sale transaction of shares between buyer and seller is usually considered to provide the best prima facie market indicator as to the "true value" of shares at that particular time.
- Shares outstanding are those that are authorized by the government, issued by the company, and held by third parties. The number of shares outstanding times the share price gives the market capitalization of the company, which if the trading price held constant would be sufficient to purchase the company.
- Treasury shares are authorized, issued, and held by the company itself.
- Issued shares is the sum of shares outstanding and treasury shares.
- Shares authorized include both issued (by the board of directors or shareholders) and unissued but authorized by the company's constitutional documents.
Tax treatment of dividends varies between tax jurisdictions. For instance, in India
, dividends are tax
free in the hands of the shareholder up to INR 1 million, but the company paying the dividend has to pay dividend distribution tax at 12.5%. There is also the concept of a deemed dividend
, which is not tax free. Further, Indian tax laws include provisions to stop dividend stripping
- ^ Chen, James (23 February 2018). "Shares Definition". Investopedia. Retrieved 9 July 2013.
- ^ Hoang, Paul (2007). "1.4 Stakeholders". Business and Management. Victoria: IBID Press. pp. 71. ISBN 1-876659-63-7.
- ^ "Chapter 22 Company-An Introduction" (PDF). Accountancy. Noida, Uttar Pradesh, India: National Institute of Open Schooling. 2008. p. 242. Retrieved 24 August 2011.
- ^ "All about shares and tax". Rediff India Abroad. 16 January 2006. Retrieved 23 February 2012.
Last edited on 2 July 2021, at 22:00
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