Shares and Share Capital

Shares and Share Capital: An Overview

Share:

A share represents the interest of a shareholder in a company. It embodies ownership rights as outlined in the articles of association and holds a nominal value.

Share Certificate:

The ownership interest is officially documented through a share certificate. When a share is allotted, the company must issue the certificate within six days. In case of share transfer, a new member should receive the share certificate within two months. The share certificate serves as prima facie evidence of ownership, and the company cannot dispute its contents unless proven as a forgery.

Share Capital:

Share capital denotes the capital raised by a company through share issuance. The Memorandum of Association's capital clause specifies the registered capital amount, including details of shares. The company cannot exceed this limit without amending the memorandum.

Types of Share Capital:

Nominal Authorized or Registered Capital:

Maximum amount mentioned in the memorandum's capital clause.

Represents the registration fee-paid capital limit.

Issued Capital:

Nominal value of shares offered for public subscription.

Typically less than authorized capital, not exceeding it.

Subscribed Capital:

Part of issued capital at nominal value subscribed by shareholders.

May be less than the issued capital.

Called-up Capital:

Part of issued capital demanded from shareholders.

The amount shareholders remain liable to pay upon calls.

Paid-up Capital:

Total amount of called-up capital actually paid by shareholders.

"Calls in arrears" represent unpaid calls.

Call on Shares:

A call is a company's demand on shareholders to pay the remaining balance on each share. It can be made at any time during the company's existence or during winding up.

Transfer of Shares:

The transfer of shares refers to the process of moving ownership of shares from one party to another. This can happen for various reasons, such as selling shares, gifting them, or transferring them as part of an inheritance. Here are the general steps involved in the transfer of shares: