Meaning of Shares, Stock, Difference Between Shares and Stock

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.

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