Here is the guide that will take you to the tour where you will be learning about the concept of shares and stock of a company as well as the difference between shares and stock. So, stay along and enjoy the journey of learning. Also, do not forget to share it with others as we grow by sharing our knowledge only.
What do you mean by the term “shares”?
Share is basically known as the interest of a member in the company. Section 2(84) of the Companies Act, 2013 (hereinafter referred to as Act) “share” means a share in the share capital of a company and includes stock. It represents the interest of a shareholder in the company, measured for the purposes of liability and dividend. As per the Companies Act, a company can issue two types of shares, namely :-
- Preference Shares
- Equity Shares
What is stock?
A stock is a general term used to describe the ownership certificates of any company. It is a form of security that indicates the holder has proportionate ownership in the issuing corporation and is sold predominantly on stock exchanges.
So, we can simply understand that the term ‘stock’ tells us in what we are investing in and a share is the amount of portion you will be owning from the stock you own.
Difference between shares and stock
| POINTS | SHARES | STOCK |
| Nature | Shares in physical form bear distinct numbers | Stock are the consolidated value of share capital |
| Paid-up value | Shares may or may not be fully paid up | Stock is always fully paid up |
| Nominal value | Shares have a nominal value | Stock does not have any nominal value |
| Fractions | It is not possible to transfer shares into a fraction | Stock is divisible into any amount required |
| Existence | A share comes into existence before the Stock and it is issued initially. | Stock comes into the existence after conversion of shares into stock and on the conversion of governing the shares shall cease to apply to the share capital as it is converted into stock. |
Conclusion
Thus, from the above difference between shares and stock in company law, we can conclude that both are similar terms. But somewhat different. So, it is necessary to go through it and gain knowledge of the same.
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