12.6.1 (SHARES AND SHARE CAPITAL)

12.6.1 Meaning of a share. Section 2(46) defines a share "as a share in the. Share capital of a company and includes stock except where a distinction between stock and share is expressed or implied". This definition does not bring out the meaning of a share in its true perspective. A share signifies the following:

            (i) the interest of a shareholder in the company; the right to receive dividend, attend meeting, vote at the meeting and share in the surplus assets of the company, if any, in the event of the company, being wound up [Bacha F. Guzdar v. Commissioner of Income Tax, Bombay, L.R. 617(S.C.)];

            (ii) the liability of the shareholder in the company to pay calls on shares until

fully paid up;

            (iii) the right of the shareholder to transfer the shares subject to the articles of association (For this s.82 classifies shares as movable property transferable in the manner provided in the articles);

            (iv) binding covenants on the part of the company as well as the shareholder, as given in the Articles of the company.

Thus, a share of a company in the hands of a shareholder signifies a bundle of rights and obligations [Viswanath v. East India Distilleries (1957) 27 Comp. Cas.175]. But a share is not a negotiable instrument [C.I.T. v. Associated Industrial Dev.Co. (1969) 2 Comp. L.J. 191]

Section 83 requires that each share in a company having a share capital must be distinguished by its appropriate number.

The Companies (Amendment) Act 1999 has amended s.82 to the effect that for the word 'shares', the words 'shares and debentures' shall be substituted.