Before investing in the Share Market, it is essential to know what Share is and the Different Types of Shares. This article will explain what is shares and what are the types of shares. We also mention the different types of shares. Let’s start a discussion on both of them.
What is Share?
A share is a small company unit that represents its ownership. There are many different factors Fluctuate the price of a claim. When any company moves towards growth, then the cost of that particular company will increase, and if you are the shareholder that shares, you can profit after selling it. Hope this definition of what is share is valuable and easy to understand.
It is important to get proper knowledge of Share Market before investing in it, investing without any knowledge can make your pocket empty and left you behind with nothing. For getting the proper knowledge of Stock Market you can enroll in Best Share Market Institute in Delhi. Also investing in Stock Market you will learn about the working nature of company and also you will give you the knowledge about the success and failure of the company and how the economy of country effect the business and whole market
Different Types of Shares
Basically the types of shares are two, let me explain both the types in detail.
1 Equity Shares
Equity Share is also known as ordinary share.This types of share is most common type which is trade in primary market. These shares are the documents that provide the company’s right of ownership. The shareholder of equity shares always bears the highest risk. Also, the owners of these types of shares have voting rights. Equity shares can easily be transferable, and the dividend is paid to equity shareholders when the company gains profit. The most important is that the dividend amount for those shareholders is not fixed.
Also, equity shares are divided based on the share capital.
Authorized Share Capital- This is the maximum capital that any company can issue. Also, it can be increased in some particular period. When companies go through with this process, they need to pay the fees for legal entries.
Issued Share Capital- This capital is the part of authorized capital offered to the investors by the company.
Subscribed Share Capital- This capital refers to the part of the issued capital in which investors accept and agree.
Paid-up Capital- This type of capital refers to the part of subscribed capital in which investors have to pay.
Now let’s discuss the types of shares.
Proper Share: These types of shares are issued by a company for its existing shareholders or investors. These types of claims are give to protect existing shareholders’ rights.
Bonus share: There might be chances where companies issued their claims for the shareholder the part of the dividend.
Sweat equity shares: When the employees and directors of companies play the role well or perform the task better than expected, these types of claims are issued.
Preference Shares
An ongoing discussion of the types of shares. Here comes the other kind: Preference shares. At the company’s liquidation, the preference shareholder have the first right to get paid off. Also, they have the right to receive a part of the profits earned by the company before the common shareholders.
Cumulative and Non– Cumulative Shares- When a company doesn’t declare its dividend in a particular year, it takes the following year forwards. And when the company gains profit in future, then these accumulated dividends will pay first. In noncumulative shares, dividends are not carry-forwards, meaning no profits will be deliver in the future.
Participating and Non- Participating Share- Participation shares are those types of shares in which shareholders have the right to receive the amount of profit after the dividend is paid off. So in the future, the company gains the profit, then these shareholders will receive some amount from it. Non- Participating shareholders don’t have the right to take part from profit once the dividend is paid.
Convertible and Non Convertible Shares:Convertible shareholders have full rights to convert or change their shares in equity or ordinary shares. For conversation, these types of shareholders must go through some specific conditions. And when it comes to Non-Convertible Shareholders then they don’t have rights to convert they shares in equity
Redeemable and Non- Redeemable Preference Shares– It is easy to reclaim the Redeemable Preference after issuing by the company. It can be done at a particular period at a predertmined time.
Also Read- Forex Risk For Beginners
Final Say
Hope this information will make things clear about what is share and what are the types of shares. Please go through this information and start investing in the share market with the Best Share Market Institute in Delhi Today.
