What is a Share?

A Share is a unit of small denominations that sum up to form a capital. The company’s capital is divided into smaller portions or units that represent the company’s ownership percentage. Each such unit is called a share. Section 2(84) of the Companies Act, 2013 defines “A share is the interest of a member in a company.” For Example: If the Capital of the company is ₹20,00,000, divided into 2,00,000 units of ₹10 each. Each such unit of ₹10 will be called a Share.

 The share shows the claim of the shareholder in the equity of the company. The purpose of dividing the capital into shares is to raise the fund conveniently required by the company. The shares are movable and transferable property that can be exchanged easily. A share of the public company is freely traded at the Stock Exchange, and is considered good under The Sales Of Goods Act, 1930. The value of the share is subject to change depending upon various market factors and the value keeps on fluctuating. The shares are broadly classified under two categories:

• Equity Shares               
• Preference Shares

Issuing of Shares and Debentures are two of the most prominent source of finance for any business. By issuing shares and debentures, any public company can generate finance from the market. Finance required by the business to establish and run its operations is known as Business Finance. No business can function without an adequate amount of funds for undertaking various activities. To be able to produce goods or provide services, any business needs money.