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Types of Shares |
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Before knowing what are the types of shares one must know what does share means. In financial market shares are a very important thing. It is a financial instrument which includes mutual funds, stocks, limited partnerships, REIT's. Whatever income is received from the shares is called dividend. Whoever hold a share is called shareholder. Share is a limited portions of a company's capital which is owned by a share holder. There are four types of shares which are Ordinary Shares, Bearer Shares, Preference Shares and Registered Shares. Bearer share is a type of share in which the owner is the person who owns it.
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As there are no registry process is required to do at issuing institutions they are easy to negotiate. The person who ons this type of share is called bearer. It is a corporation stock certificates which are owned by a person who possesses the shares. When the system of corporation came into existence there was only this type of share. But as the process of marketing and corporation things improved many new types of shares came into existence.
Registered shares is one of the types of shares. The owner under whose name the shares are registered is called registered shares. The company which issues the registered shares maintains a stock ledger with the names of the all shareholders. For example if the shareholder wants to sell the instrument the company can register it in the stock holder. Those shares which do not have any preferred shares are called Ordinary Shares. In this type of shares there are no predetermined dividend funds. Any shares that are not preferred shares and do not have any predetermined dividend amounts. If any dividends are available the shareholder is entitled to receive it. The shareholder of ordinary shares cannot enjoy the classical rights. The Preference shares is one of the types of shares. Preference share gives only partial share to the shareholder. The shareholder of this share carry some right which gives him preferential treatment when the dividends are distributed annually. The shares belonging to this category have fixed fixed value. That means if the company is earning more profit it is not going to benefit the shareholder.
Shares play an important part in the company's expansion. When the company thinks that it needs more financial support it sells its shares and when the a person by a portion of share he is called shareholder. The income received by the shareholder becomes the dividend. Shares is one of the important instrument of finance which is dominating the present market. In a nutshell shareholder is said to be an individual company. To become a shareholder of a company the company must be listed in the stock market. In most of the cases when the company plan to launch a new project and are in need of more capital they issue shares. Depending on the types of shares the person will get the dividend.
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