Meaning of Shares:
In simple words, a part of total capital of a company is called share and the person who owns it is called shareholder. It represents the interest of a shareholder in a definite portion of the capital of a company. It expresses a proprietary relationship between the company and the shareholder. A shareholder is the proportionate owner of the company.
According to Section 2(84) of the Companies Act’ 2013,”A share in the share capital of a company and includes stock except where a distinction between stock and shares is expressed or implied”.
In the words of Farwell J. “A share is the interest of a shareholder in the company, measured by a sum of money, for the purpose of liability in the first place, and of interest the second, but also consisting of a series of mutual covenants entered into by all the shareholder inter se in accordance with the companies act”.
Meaning of Stock:
Stock is simply a set of shares put together in a bundle which is represented in terms of money only. A company cannot issue stock but can convert its fully paid shares into stock. Like shares, stocks are also freely transferable.
Difference between Shares and Stocks
|Basis of Difference||Shares||Stocks|
|Paid-up value||Shares may be fully paid up or partly paid up.||Stocks are fully paid up.|
|Issue||Shares can be issue directly.||Stocks cannot be issued directly.|
|Numbering||Shares are serially numbered.||Stocks are not numbered.|
|Registration||Shares are always registered.||Stock may be registered or unregistered.|
|Fractions||Shares cannot be transferred in fraction.||Stock can be transferred in any fraction.|