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In
financial markets A financial market is a market Market may refer to: *Market (economics) *Market economy *Marketplace, a physical marketplace or public market Geography *Märket, an island shared by Finland and Sweden Art, entertainment, and media Films *Ma ...

financial markets
, a share is a unit used as
mutual fund A mutual fund is a professionally managed investment fund An investment fund is a way of investment, investing money alongside other investors in order to benefit from the inherent advantages of working as part of a group such as reducing the ri ...
s,
limited partnership A limited partnership (LP) is a form of partnership A partnership is an arrangement where parties, known as business partner A business partner is a commercial entity with which another commercial entity has some form of Business alliance, a ...
s, and
real estate investment trust A real estate investment trust (REIT) is a company that owns, and in most cases operates, income-producing real estate. REITs own many types of commercial real estate, including office building, office and apartment buildings, warehouses, hospitals ...
s.
Share capital __NOTOC__ A corporation's share capitalGlossary on Trade Financing Terms - S
in the U ...
refers to all of the shares of an enterprise. The owner of shares in the company is a
shareholder A shareholder (in the United States often referred to as stockholder) of a corporation is an individual or legal entity (such as another corporation, a body politic, a Trust law, trust or partnership) that is registered by the corporation as the ...
(or stockholder) of the corporation. A share is an indivisible unit of capital, expressing 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 the capital of a company, which may not reflect the market value of those shares. The income received from the ownership of shares is a
dividend A dividend is a distribution of profit Profit may refer to: Business and law * Profit (accounting), the difference between the purchase price and the costs of bringing to market * Profit (economics), normal profit and economic profit * Profit ...

dividend
. 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.


Valuation

Shares are valued according to the various principles in different
market Market may refer to: *Market (economics) *Market economy *Marketplace, a physical marketplace or public market Geography *Märket, an island shared by Finland and Sweden Art, entertainment, and media Films *Market (1965 film), ''Market'' (1965 ...
s, 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. The
liquidity Liquidity is a concept in economics involving the convertibility of assets and obligations. It can include: * Market liquidity In business Business is the activity of making one's living or making money by producing or buying and selling ...

liquidity
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.


Terminology

*
Shares outstanding Shares outstanding are all the share Share may refer to: * Share, to make joint use of a resource (such as food, money, or space); see Sharing * Share (finance), a stock or other financial security (such as a mutual fund) * Share, Kwara, a town and ...
are those that are authorized by the government, issued by the company, and held by third parties. The number of shares outstanding times the share price gives the
market capitalization Market capitalization, commonly called market cap, is the market value of a publicly traded company A public company, publicly traded company, publicly held company, publicly listed company, or public limited company A public limited compan ...
of the company, which if the trading price held constant would be sufficient to purchase the company. *
Treasury share A treasury stock or reacquired stock is Share capital, stock which is bought back by the issuing company, reducing the amount of outstanding stock on the open market ("open market" including insiders' holdings). Share repurchase, Stock repurcha ...
s are authorized, issued, and held by the company itself. *
Issued sharesIn finance Finance is the study of financial institutions, financial markets and how they operate within the financial system. It is concerned with the creation and management of money and investments. Savers and investors have money available w ...
is the sum of shares outstanding and treasury shares. *
Shares authorized The authorised capital of a company (sometimes referred to as the authorised share capital, registered capital or nominal capital, particularly in the United States) is the maximum amount of share capital that the company is authorised by its consti ...
include both issued (by the board of directors or shareholders) and unissued but authorized by the company's
constitutional documentsIn relation to juristic personA juridical person is a non-human legal entity, in other words any organization that is not a single natural person but is authorized by law with duties and rights and is recognized as a legal person and as having a ...
.


Tax treatment

Tax treatment of dividends varies between tax jurisdictions. For instance, in
India India, officially the Republic of India (Hindi Hindi (Devanagari: , हिंदी, ISO 15919, ISO: ), or more precisely Modern Standard Hindi (Devanagari: , ISO 15919, ISO: ), is an Indo-Aryan language spoken chiefly in Hindi Belt, ...

India
, dividends are
tax A tax is a compulsory financial charge or some other type of levy imposed on a taxpayer (an individual or legal entity In law Law is a system A system is a group of Interaction, interacting or interrelated elements that act accord ...
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 deemed
dividend A dividend is a distribution of profit Profit may refer to: Business and law * Profit (accounting), the difference between the purchase price and the costs of bringing to market * Profit (economics), normal profit and economic profit * Profit ...

dividend
, which is not tax free. Further, Indian tax laws include provisions to stop
dividend strippingDividend stripping is the practice of buying shares In financial markets A financial market is a market in which people trade financial securities and derivatives at low transaction costs. Some of the securities include stocks and bonds, ...
.


Share certificates

Historically, investors were given
share certificate In company (law), corporate law, a stock certificate (also known as certificate of stock or share certificate) is a legal document that certifies ownership of a specific number of share (finance), shares or Share capital, stock in a corporation. ...

share certificate
s 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 as
CREST Crest or CREST may refer to: Buildings *The Crest (Huntington, New York) The Crest is a historic house on Eatons Neck in Suffolk County, New York. Although on the land mass of Eatons Neck, the house today is within the jurisdiction of the Incor ...
or DTCC, a
central securities depository A central securities depository (CSD) is a specialized financial organization holding securities A security is a tradable financial asset A financial asset is a non-physical asset In financial accountancy, financial accounting, an asset is an ...
.


See also

*
Employee stock ownership Employee stock ownership, or employee share ownership, is where a company A company, abbreviated as co., is a Legal personality, legal entity representing an association of people, whether Natural person, natural, Legal personality, legal or a m ...
*
Mutual organization A mutual, mutual organization, or mutual society is an organization (which is often, but not always, a company (law), company or business) based on the principle of mutuality and governed by private law. Unlike a true cooperative, members usually ...
*
Scrip issue In corporate finance Corporate finance is the area of finance that deals with sources of funding, the capital structure of corporations, the actions that managers take to increase the Value investing, value of the firm to the shareholders, and ...
*
Share capital __NOTOC__ A corporation's share capitalGlossary on Trade Financing Terms - S
in the U ...
*
Social ownership Social ownership is the appropriation of the surplus product Surplus product (german: Mehrprodukt, links=no) is an economic concept explicitly theorised by Karl Marx Karl Heinrich Marx (; 5 May 1818 – 14 March 1883) was a German philos ...
*
Stock token A blockchain is a growing list of records A record, recording or records may refer to: An item or collection of data Computing * Record (computer science), a data structure ** Record, or row (database), a set of fields in a database related t ...


References


External links

* * {{Authority control Equity securities Stock market