Answer By law4u team
Shares and shareholders are basic concepts in company law in India and are governed by the provisions of the Companies Act, 2013. Shares are units of ownership in a company. The capital of a company is divided into small equal parts called shares, and each share represents a portion of ownership in the company. When a person purchases or is allotted shares, that person becomes a part owner of the company to the extent of the shares held. A shareholder is the person, company, or legal entity that owns one or more shares in a company. Shareholders are also called members of the company because their names are entered in the register of members maintained by the company. Shareholders enjoy certain rights depending on the type of shares they hold. These rights may include the right to vote in company meetings, the right to receive dividends when declared, the right to receive a share in the company assets after liquidation, and the right to transfer shares subject to legal rules and company regulations. There are different types of shares such as equity shares and preference shares. Equity shareholders generally have voting rights and participate in profits, while preference shareholders get priority in receiving dividends and repayment of capital but may have limited voting rights. Shareholders also have certain responsibilities. They must pay the amount due on shares and comply with the company’s rules as mentioned in its constitutional documents.
