Presented by:

Nadeem
2014BBA002
Shridhar University

Presented to:

Mr. DEEPAK KUMAR

(Faculty Management
Department)
• The capital of a company is divided into shares.
Each share forms a unit of ownership of a
company and is offered for sale so as to raise
capital for the company.

• A “Share” has been defined by the Indian

Companies Act, under Sec. 2(46) as “A Share
is the share in the capital of the Company and
includes stock”.
 Preference Shares
1. It offers a fixed rate of dividend.
2. Right to get capital on winding up, before
anything is paid to equity shareholders.

 Equity Shares
1. These shares have voting rights.
2. It doesn’t offer a fixed rate of return.
3. They are not entitled to get capital on winding
up, before paying to preferences shareholders.
 Share capital denotes the amount of capital raised by the
issue of shares, by a company. It is collected through the
issue of shares and remains with the company till its
liquidation.

Share capital is owned capital of the company, since it is the

money of the shareholder and the shareholder are the owners
of the company. The total share capital is divided into small
parts and each part is called a share. Share is the smallest
part of the total capital of a company.

• Share Capital denotes the amount of Capital

raised by the issue of shares, by a company.
• Issue of shares involves the following steps:

 Issue of prospectus including people to take up

shares.
 Receiving applications along with application
money.
 Allotment of shares.
 Making calls on shares as decided by the Board
of Directors.
 Issue and dispatch of share certificate.
• Share Forfeiture is the process by which the
directors of a company cancel the power of
shareholder if he does not pay his call money
when the company demands for it. Company
will give notice generally of 14 days; after 14
days if shareholder does not pay then company
will forfeit his shares and cut off his name from
the register of shareholder. Company will not
pay the received funds from the shareholder. In
order to do a share forfeiture the Articles of
Association of the company should contain
provision for that.
 Profit making companies may
desire to convert their profit into share
capital. This can be done by issue of
bonus shares. Issue of Bonus shares
is also called as conversion of profit
into share capital.
A shareholder who is not able to pay the call
money may surrender it’s shares to the company.
The company cancels such surrender shares.
Surrender is a voluntary act on the part of the
shareholder, whereas Forfeiture is a compulsory
act on part of the company. The effect of both
surrender & Forfeiture is the same, i.e.
cancellation of the shares. The company can
accept surrender of shares if permitted by its
Article of Association.