Define ‘Share’ and ‘Stock’ and distinguish between them

Share. A share in the company me1ns a unit into which the total

capital ofthe company is divided. Sec. 2 (46) of the Companies Act defines a ‘sharc’ as ‘a share in the share capital of a company and includes stock

except where a distinction between share and ‘state is expressed or implied’. In simple words, it implies the interest of a shareholder in the company

measured in tenus of money and made up of diverse rights conferred on its holders by the Articles of the Company which constitute a contract between

him and the company. (Commissioner of Income Tax vs. Standard Vacuum Oil Company).

Stock. Stock is the aggregate of fully paid up shares, consolidatcd and divided for the purpose of convenient holding into different parts. Stock may be

consolidated or divided in any amount and transferred into any fractions and sub-divisions without regard to any face value of the shares.

A company cannot issue stock originally. Stock can only be obtained by conversion (0) if shares are fully paid and (b) if Articles pennit the conversion

requires passing of an ordinary resolution by members. Stock can

further bc reconverted into shares by passing an ordinary resolution. A shareholder enjoys the rights and privileges as they are enjoyed by a ‘Nominal’

capital.

2. Issued CupitaJ. It is that part of the authorised capital which is allotted by the company either for cash or for consideration other than cash and includes

shares allotted to the signatories to the Memorandum of Association.

3. Subscribed CapituJ. It is that portion of the issued capital at face value, which has been taken up by subscribers of shares in the capital either for cash

or for consideration other than cash. Thus, it is not necessary that the etire share capital must be subscribed. Where in a company, the shares are fully

paid-up the subscribed capital should be equal to the issued capital.

4. Culled-up C’pitul. It is that portion of the subscribed capital which has been called up or demanded on the shares of the company. For example, where

Rs. 5 has been called upon each of 50,000 shares of a nominal value of Rs. 10-, the called up capital shall be Rs. 2,50,000-.

5. Unc,lIed C’IJital. It is’that total amount which is not yet called up or demanded by the company on the shares subscribed, which the shareholders are

liable to pay as and when called. Thus, in the above case, the uncalled capital is Rs. 2,50,000-.