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    Topic: Types of Shares

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    Suresh
    There are three main types of shares that can be issued by companies: equity shares, preference shares, and deferred shares. Equity shares carry voting rights but no fixed dividend, preference shares have a fixed dividend but no voting rights, and deferred shares are the lowest priority for dividend or capital repayment upon liquidation. Preference shares can be further classified as cumulative or non-cumulative, participating or non-participating, convertible or non-convertible, and redeemable or irredeemable.

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    Topic: Types of Shares

    Uploaded by

    Suresh
    237 views11 pages
    There are three main types of shares that can be issued by companies: equity shares, preference shares, and deferred shares. Equity shares carry voting rights but no fixed dividend, preference shares have a fixed dividend but no voting rights, and deferred shares are the lowest priority for dividend or capital repayment upon liquidation. Preference shares can be further classified as cumulative or non-cumulative, participating or non-participating, convertible or non-convertible, and redeemable or irredeemable.

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    There are three main types of shares that can be issued by companies: equity shares, preference shares, and deferred shares. Equity shares carry voting rights but no fixed dividend, preference shares have a fixed dividend but no voting rights, and deferred shares are the lowest priority for dividend or capital repayment upon liquidation. Preference shares can be further classified as cumulative or non-cumulative, participating or non-participating, convertible or non-convertible, and redeemable or irredeemable.

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    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    237 views11 pages

    Topic: Types of Shares

    Uploaded by

    Suresh
    There are three main types of shares that can be issued by companies: equity shares, preference shares, and deferred shares. Equity shares carry voting rights but no fixed dividend, preference shares have a fixed dividend but no voting rights, and deferred shares are the lowest priority for dividend or capital repayment upon liquidation. Preference shares can be further classified as cumulative or non-cumulative, participating or non-participating, convertible or non-convertible, and redeemable or irredeemable.

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    of 11

    Topic : Types Of Shares

    - Naveen Sambu
    Contents :

     What are SHARES.


     Types of Shares :
     Equity Shares
     Preference Shares
     Deferred Shares
     Types of Preference Shares
    What are SHARES?
    Definitions:

    As per THE COMPANIES


    ACT,1956:
    “A share is a share in the share
    capital of a Company.”
    Kinds Of Shares :

    The different kinds of shares which can be


    raised by Companies are :

     EQUITY SHARES
     PREFERENCE SHARES
     DEFERRED SHARES
    Equity Shares :
    The equity shares or ordinary shares are those shares on
    which the dividend is paid after the dividend has been paid on
    preference shares.
    Characteristics:
     No fixed rate of dividend.
     Dividend is paid after dividend payable on preference shares.
     At the time of liquidation, capital on equity is paid after
    preference shares have been paid back in full.
     Non redeemable.
     Equity shareholders have voting rights & thus, control the
    working of the Company.
     Equity shareholders are the actual owners of the Company.
    Preference shares :
    Preference shares are those shares which carry with them
    preferential rights for their holders, i.e, preferential right as
    to payment of dividend & as to repayment of capital at the time
    of winding up of the Company.
    Characteristics :
     Fixed rate of dividend.
     Priority as to payment of dividend.
     Preference as to repayment of capital during liquidation of the
    Company.
     Generally preference shareholders do not have voting rights.
     According to The Companies (Amendment) Act, 1988, the
    preference shares can be redeemable & the maximum period for
    which they can be issued is 10 years.
    Status of Preference Shares

    Preference shares will be presumed to be:

     Cumulative
     Non-Participating
     Irredeemable and
     Non-Convertible.
    Kinds of Preference Shares :
     On the basis of cumulation of dividend :
     Cumulative Preference Shares:
    They are those shares on which the dividend rate goes on
    cumulating till it is all paid.
     Non Cumulative Preference Shares:
    These are those shares on which the dividend does not
    cumulate.
     On the basis of participation :
     Participating Preference shares:
    This type of shares are allowed to participate in surplus
    during winding up.
     Non Participating Shares:
    These shares are not entitled to participate in surplus.
    Kinds of preference shares :
     On the basis of conversion :
     Convertible preference shares:
    The owners of these shares have the option to convert
    their preference shares into Securities (can be Equity,
    other preferred stock or debentures) as per the terms of
    issue.
     Non-convertible preference shares:
    The owners of these shares do not have any right of
    converting their shares into equity shares.
     On the basis of redemption:
     Redeemable preference shares:
    These are to be paid back by the company after a certain
    period as per the terms of issue.
     Irredeemable preference shares:
    These are not to be purchased back by the company during
    its lifetime. Not issued in India after 1985 Companies Act.
    Deferred Shares :
    Deferred shares are those shares on which the payment of
    dividend and capital (at the time of winding up of a company) is
    made after money is paid in full on preference shares and
    equity shares. These shares are held by Founders or beginner
    of the company.
    Characteristics:
     Rate of dividend is not fixed. It depends upon the availability
    of profits & the discretion of the Board of the Directors.
     Dividend is paid after payment of dividend on equity &
    preference shares.
     At the time of liquidation, capital on these shares is returned
    after capital is repaid on both preference & equity shares.
    Thank you !!

    Any Questions??

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