Meaning :
Expression of the 'share' in the literal sense means, 'a part' or 'a division' or 'a portion'. In Company Law, it refers to unit of the capital of a public limited company. A person who owns share/ shares is called 'shareholder'. In other words, the capital of a public limited company is divided into small units called 'shares'. A share is an interest of a shareholder in a company. A private company can start business after registration/ incorporation. But a public limited company cannot start business until and unless the certificate of commencement of business is issued. For this purpose a public limited company has to issue prospectus within 90 days of its incorporation and should secure minimum subscription within 30 days. Therefore, share and share capital forms basis for creation and existence of a public limited company. The rights and liabilities of a shareholder are regulated by the articles of association of the company.
The word 'share' ordinarily means a part or definite portion of a thing owned by a number of persons in common. It contemplates something owned in common by two or more persons and has reference to that part of the undivided interest which belongs to some of them.
A share is not a sum of money, but represents an interest measured by a sum of money and make up of diverse rights contained in the contract evidenced by the articles of association of company.
Definition:
It's very difficult to define 'share'. Various authors defined it in different/various ways as follows:
According to Dixon, J. 'Primarily a share in a company is a piece of property conferring right in relation to distribution of income and capital.
"A share is a right to a specific amount of the share capital of a company carrying with it certain rights and liabilities while the company is a going concern and on its winding up'
Chiranjitlal Chowdary v. Union of India, (1950) SCR 869
According to Section 2(46) of the Companies Act, 1956, 'share' means share in the share capital of a company, and includes stock except a distinction between stock and shares is expressed or implied.
According to Section 2(84) of the Companies Act, 2013, 'share' means a share in the share capital of a company and includes stock.
Nature of Share:
Nature of share, it is not a sum of money but carries with it a bundle of rights and liabilities. It may therefore, be called as an interest measured by a sum of money.
Shares form basis for capital of a public limited company. Share is an interest of a shareholder. It fixes the rights and obligations of the shareholder. It is a movable property since the shares are easily transferable from one person to another in an open market.
A share entitles the holder to receive a proportionate part of the profits of the company; to take part in the management of the company's business in accordance with the Articles; to receive a proportion of the assets in the event of winding up and all other benefits of membership. A share also carries some liabilities i.e. the liability to pay the full value in winding up.
According to Lord M.R.Greene, a man's movable property is of two kinds, viz. choose-in-possession and choose-in-action. Choose in possession means property, which you have in your control and in your actual physical possession but 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 a legal action. This right is generally evidenced by a document, for example, a railway receipt. A share in a company is also a choose-in-action and the share certificate is the evidence of it.
Features of Share:
1. Share is a definite part of the authorised share capital of a company.
2. Share is a 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 it the rights and obligations of the shareholder which remains shares of the company during its subsistence
5. It is, in fact, that interest of the shareholder on the basis of which the shareholder does not have right over the assets of the company; he merely acquires right to share in the profits of the company and bear its losses to the extent indicated thereon.
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