different type shares


  SHARES.ppt (Size: 60 KB / Downloads: 5)

EQUITY SHARES -


S.85 , equity share means a shares which is not a preference shares .

The rate of dividend is not fixed.The Board of Directors recommend the rate of dividend which is then declared by the members at the Annual General Meeting.

The holders of equity shares have voting rights in proportion to the paid-up equity capital of the company.



Right shares

The existing members of the company have a right to be offered shares,when the company wants to increase its subscribed capital. Such shares are known as ‘right shares’ but they are not issued free of cost.
Rights are often transferable, allowing the holder to sell them on the open market.
A right to a share is generally issued on a ratio basis.


Bonus shares/ Bonus issue- A

company may issue , if the articles so provides, capitalize profits by issuing fully-paid up shares to the existing members, based upon the number of shares that the shareholder already owns.
This shares are issued to the existing members of the company free of charge.
While the issue of bonus shares increases the total number of shares issued and owned,


PREFERENCE SHARES:


Preference shares are those which have preferential right
for the payment of dividend during the lifetime of the company,
a preferential right for the return of capital when the company
is wound up.

They does not enjoy any voting power
The dividend on preference shares is fixed by the Articles of
the company.
The dividend on preference share holders is pre-determined and therefore they will not get any benefit in times of large profit.
Preference shares have prior claim on the profit available for
dividend and a prior claim to repayment of capital in the event of
winding up.


PARTICIPATING PREFERENCE SHARES:

When preference shares participate like equity shares in the profits of a company in addition to their stated profits they are known as participating preference shares.

These shares are not only entitled to a fixed rate of dividend,but also to share in the surplus profits which remain after the claim of the equity shareholders have been met.

The surplus profits are distributed in a certain agreed ratio between the shareholders of participating preference shares and equity shareholders.