A share certificate from 1936 entitling the holder to shares inGreyhound Lines
Ashare (sometimes someone can refer to asstock orequity) is a unit ofequity ownership in thecapital stock of a corporation. It can refer to units ofmutual funds,limited partnerships, andreal estate investment trusts.[1]Share capital refers to all of the shares of an enterprise. The owner of shares in a company is ashareholder (or stockholder) of thecorporation.[2] A share expresses the ownership relationship between the company and the shareholder.[1] The denominated value of a share is its face value, and the total of the face value of issued shares represent thecapital of a company,[3] which may not reflect the market value of those shares.
The income received from the ownership of shares is adividend. There are different types of shares such as equity shares, preference shares, deferred shares, redeemable shares, bonus shares, right shares, and employee stock option plan shares.
Shares are valued according to the various principles in differentmarkets, but a basic premise is that a share is worth the price at which a transaction would be likely to occur were the shares to be sold. Theliquidity of markets is a major consideration as to whether a share is able to be sold at any given time. An actual sale transaction of shares between buyer and seller is usually considered to provide the best prima facie market indicator as to the "true value" of shares at that particular time. Aminority discount is usually applied when valuing a minority shareholding (less than 50%), where ownership of the shares offers limited control over the business if this is held by a majority shareholder.
Tax treatment of dividends varies between tax jurisdictions. For instance, inIndia, dividends aretax free in the hands of the shareholder up to INR 1 million, but the company paying the dividend has to pay dividend distribution tax at 12.5%. There is also the concept of a deemeddividend, which is not tax free. Further, Indian tax laws include provisions to stopdividend stripping.[4][citation needed]
Historically, investors were givenshare certificates as evidence of their ownership of shares. In modern times, certificates are not always given and ownership may be recorded electronically by a system such asCREST orDTCC, acentral securities depository.
