Understanding Shares and Share Capital

What are shares?

Shares are the smallest units of ownership in a company.

What is the share capital?

Share capital refers to the maximum number or value of shares a company can issue at a particular time. Share capital can be increased or decreased by the owners of the company.

What are ordinary shares?

These are shares that bear the liability of the company i.e. they are the risk bearers of the company and are the equity shares of the company.

What are deferred shares?

They are also referred to as founder shares and are usually acquired by the promoters of the company. They are way cheaper than any other type of shares.

What are preference shares?

A share which entitles the holder to a fixed dividend, whose payment takes priority over that of ordinary share dividends.

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