Share (finance)

For the cumulative total shares of a corporation, seeShare capital.

"Shares" redirects here. For other uses, seeShare.

Infinancial markets,ashare(sometimes referred to asstockorequity) is a unit ofequity ownershipin thecapital stockof a corporation. It can refer to units ofmutual funds,limited partnerships,andreal estate investment trusts.Share capitalrefers to all of the shares of an enterprise. The owner of shares in a company is ashareholder(or stockholder) of thecorporation.A share expresses the ownership relationship between the company and the shareholder.The denominated value of a share is its face value, and the total of the face value of issued shares represent thecapitalof a company,which may not reflect the market value of those shares.

A share certificate from 1936 entitling the holder to shares inGreyhound Lines

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.

Terminology

• Stock
• Equity
• Shares outstandingare shares that are authorized by the government, issued by the company, and held by third parties.
• Treasury sharesare shares that are authorized, issued, and held by the company itself.
• Issued sharesare the sum of shares outstanding and treasury shares.
• Shares authorizedinclude both issued (by the board of directors or shareholders) and unissued but authorized by the company'sconstitutional documents.

Valuation

Further information:Stock valuation

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. Theliquidityof 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 discountis 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

Tax treatment of dividends varies between tax jurisdictions. For instance, inIndia,dividends aretaxfree 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.

Share certificates

Historically, investors were givenshare certificatesas evidence of their ownership of shares. In modern times, certificates are not always given and ownership may be recorded electronically by a system such asCRESTorDTCC,acentral securities depository.

Tracing shares

As of May 2022, theUnited States Supreme Courtwas considering the case ofSlack Technologies, LLC v. Pirani,with regard to whetherSections 11 and 12(a)(2)of theSecurities Act of 1933require plaintiffs to plead and prove that they acquired shares of stock registered under and traceable to theregistration statementthey claim was misleading.

See also

• Employee stock ownership
• Mutual organization
• Scrip issue
• Share capital
• Social ownership
• Stock token

External links

• Media related toStocksat Wikimedia Commons
• The dictionary definition ofshareat Wiktionary