Share (finance)
 | This article needs additional citations for verification. (March 2008) |
| Securities |
|---|
 |
A share is a single unit of ownership in a corporation, mutual fund, or other organization.[1] A joint stock company divides its capital into shares, which are offered for sale to raise capital, termed as issuing shares. Thus, a share is an indivisible unit of capital, expressing the proprietary relationship between the company and the shareholder. The denominated value of a share is its face value: the total capital of a company is divided into number of shares.[2]
In financial markets, a share is a unit of account for various financial instruments including stocks (ordinary or preferential), and investments in limited partnerships, and real estate investment trusts. The common feature of all these is equity participation (limited in the case of preference shares).
The income received from shares is known as a dividend. A shareholder, also known as a stockholder, is a person who owns shares of a certain company or organization, and is thus a part-owner of the company.[3] The process of purchasing and selling shares often involves going through a stockbroker as a middle man.[4]
Valuation
Shares are valued according to various principles in different markets, but a basic premise is that a share is worth the price at which a transaction would be likely to occur were the shares to be sold. The liquidity of markets is a major consideration as to whether a share is able to be sold at any given time. An actual sale transaction of shares between buyer and seller is usually considered to provide the best prima facie market indicator as to the "true value" of shares at that particular time.
Tax treatment
Tax treatment of dividends varies between territories. For instance, in India, dividends are tax free in the hands of the shareholder, but the company paying the dividend has to pay dividend distribution tax at 12.5%. There is also the concept of a deemed dividend, which is not tax free. Further, Indian tax laws include provisions to stop dividend stripping.[5][citation needed]
Stock certificates
Historically, investors were given stock certificates as evidence of their ownership of shares. In modern times, certificates are not always given and ownership may be recorded electronically by a system such as CREST.
Gallery
-
A share entitling to 1/8 of the Stora Kopparberg copper mine in Sweden dating from 1288. It was the first known share company in the world. -
Share certificate of the Bombay Electric Supply & Tramways Company Limited -
The oldest-known share in the European stockmarket is shown in the Westfries Archief in Hoorn. The certificate dates from September 9, 1606 and was issued by the Dutch VOC-chamber Enkhuizen.
See also
References
- ^ "Share". The Free Dictionary - Financial Dictionary. Retrieved 23 February 2012.
- ^ "Chapter 22 Company-An Introduction". Accountancy. Noida, Uttar Pradesh, India: National Institute of Open Schooling. 2008. p. 242. Retrieved 24 August 2011.
{{cite book}}: External link in|chapterurl=|chapterurl=ignored (|chapter-url=suggested) (help) - ^ Hoang, Paul (2007). "1.4 Stakeholders". Business and Management. Victoria: IBID Press. p. 71. ISBN 1-876659-63-7.
- ^ "How to Buy Shares". ShareWorld. Retrieved 23 February 2012.
- ^ "All about shares and tax". Rediff India Abroad. 16 January 2006. Retrieved 23 February 2012.
