12.6.3 (Share vs Stock)

Share. The share capital of a company is divided into a number of indivisible units of specified amount. Each of such unit is called a 'share'. Thus, if the share capital of the company is Rs 5,00,000 divided into 50,000 units of Rs 10 each, unit of Rs 10 shall be called a share of the company.

Stock. The term 'stock' may be defined as the aggregate of fully paid-up shares of a member merged into one fund of equal value. It is a set of shares put together in a bundle. The 'stock' is expressed in terms of money and not as so many shares. Stock can be divided into fractions of any amount and such fractions may be transferred like share. Such fractions, unlike the shares, bear no distinctive numbers.

Distinction. Following are the main points of difference:

Shore

Stock

1. A shore has a nominal value. 2. A share has a distinctive number which     distinguish it from other shares. 3. Share can be issued originally to the                    public 4. A share may either be fully paid-up or partly paid-up. 5. A share cannot be transferred in fractions. It is transferred as a whole. 6. All the shares are of equal denomination. 7. Shares can be issued by any company public or private.

l. A stock has no nominal value. 2. A stock bears no such number. 3. A company cannot make an original issue of stock. Stock can be issued by existing company by converting its fully paid-up shares 4. A stock can never be partly paid-up it is always full paid-up. 5. A stock may be transferred in any fractions. 6. Stock may be of different denominations. 7. Stock can be issued only by a public   company limited by shares.

A company cannot make an original issue of the stock. A company limited by shares may, if authorised by its Articles by a resolution passed in the general meeting, convert all or any of its fully paid-up shares into stock [s.94 (1) (c)].On conversion into stock, the register of members must show the amount of stock held by each member instead of the number of shares. The conversion does not affect the rights of the members in any way.