← Back to All Questions

What are the different types of shares a company can issue?

Posted by jobseeker Lavanya Bhardwaj | Approved
Answers (3)

1. Ordinary Shares
Ordinary shares are the most common type of share. They typically carry voting rights but do not give shareholders the right to receive or demand dividends.

2. Preference Shares
Preference shares confer certain preferential rights on the holder, which are superior to those of ordinary shares.

3. Redeemable Preference Shares
Redeemable preference shares allow for the repayment of the principal share capital to shareholders. The company may redeem these shares at an agreed value on a specified date or at the discretion of the directors, provided that the company is a going concern.

4. Convertible Preference Shares
Convertible preference shares typically carry rights to a fixed dividend for a particular term. At the end of this term, the company can choose to convert these shares into ordinary shares or leave them as they are.

5. Treasury Shares
Treasury shares are ordinary shares that the company has acquired from its shareholders. Although the company is listed as the owner of these treasury shares, it is not allowed to exercise the right to attend or vote at meetings, nor can it receive dividends on these shares.

Answered by jobseeker Vipra | Approved

A company can issue equity shares (also known as ordinary shares) and preference shares, with equity shares being the most common. Equity shares offer voting rights and a claim on profits through dividends, while preference shares offer a fixed dividend and priority in dividend payments and liquidation. Some companies may also issue specialized shares like redeemable, convertible, or treasury shares.

Answered by jobseeker Garima Rajput | Approved

A company can issue various types of shares, but the two primary categories are equity shares (also known as ordinary shares) and preference shares. Equity shares represent ownership and typically come with voting rights, while preference shares offer holders certain preferential rights, such as priority in dividend payments and asset distribution upon liquidation.
Here's a more detailed breakdown:
1. Equity Shares (Ordinary Shares):
Ownership: Represent the basic ownership stake in a company.
Voting Rights: Typically, holders have voting rights in corporate matters like electing directors and approving major decisions.
Dividends: Receive dividends (a portion of profits) if declared by the company, but these are not guaranteed and are paid after preference shareholders.
Transferability: Generally freely transferable on the stock market.
Risk and Return: Equity shares offer higher potential returns but come with higher risk as dividends and asset value depend on the company's performance.
2. Preference Shares:
Priority:
Holders have priority over equity shareholders in dividend payments and asset distribution upon liquidation.
Fixed Dividend:
Usually receive a fixed dividend, providing a more stable income stream than equity shares.
Voting Rights:
May or may not have voting rights; this varies depending on the specific type of preference share.
Risk and Return:
Lower risk than equity shares due to the priority claim on assets and earnings, but potentially lower returns.
Subcategories within Equity and Preference Shares:
Equity Shares:
Differential Voting Rights (DVR) Shares: These shares have fewer voting rights than ordinary shares, but may offer other benefits like higher dividends.
Preference Shares:
Cumulative and Non-Cumulative: Cumulative preference shares accumulate unpaid dividends, which must be paid before any dividends are paid to ordinary shareholders.
Participating and Non-Participating: Participating preference shares allow holders to receive a share of company profits beyond their fixed dividend, while non-participating shares do not.
Convertible and Non-Convertible: Convertible preference shares can be converted into equity shares under certain conditions, while non-convertible shares cannot.
Redeemable and Irredeemable: Redeemable preference shares can be repurchased by the company at a predetermined price and time, while irredeemable shares do not have a maturity date.

Answered by jobseeker Chanchal Bhati | Approved

Please login to submit an answer.

Quick Contact
Copyright ©2025 Lawvs.com | All Rights Reserved