{"id":15739,"date":"2022-08-29T18:18:32","date_gmt":"2022-08-29T12:48:32","guid":{"rendered":"https:\/\/kuvera.in\/blog\/?p=15739"},"modified":"2022-08-29T18:18:32","modified_gmt":"2022-08-29T12:48:32","slug":"types-of-share-capital","status":"publish","type":"post","link":"https:\/\/kuvera.in\/blog\/types-of-share-capital\/","title":{"rendered":"Types of Share Capital"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_40 counter-hierarchy ez-toc-counter ez-toc-light-blue ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\">Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" area-label=\"ez-toc-toggle-icon-1\"><label for=\"item-69e1cd7e429f8\" aria-label=\"Table of Content\"><span style=\"display: flex;align-items: center;width: 35px;height: 30px;justify-content: center;direction:ltr;\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/label><input  type=\"checkbox\" id=\"item-69e1cd7e429f8\"><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/kuvera.in\/blog\/types-of-share-capital\/#Types_of_Share_Capital\" title=\"Types of Share Capital:\">Types of Share Capital:<\/a><ul class='ez-toc-list-level-4'><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/kuvera.in\/blog\/types-of-share-capital\/#Equity_Share_Capital\" title=\"Equity Share Capital:\">Equity Share Capital:<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/kuvera.in\/blog\/types-of-share-capital\/#Preference_Share_Capital\" title=\"Preference Share Capital:\">Preference Share Capital:<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/kuvera.in\/blog\/types-of-share-capital\/#Types_of_Equity_Shares_based_on_Share_Capital\" title=\"Types of Equity Shares based on Share Capital:\">Types of Equity Shares based on Share Capital:<\/a><ul class='ez-toc-list-level-4'><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/kuvera.in\/blog\/types-of-share-capital\/#Classification_Of_Equity_Shares_based_on_Definition\" title=\"Classification Of Equity Shares based on Definition\">Classification Of Equity Shares based on Definition<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/kuvera.in\/blog\/types-of-share-capital\/#Classification_Of_Equity_Shares_based_on_Returns\" title=\"Classification Of Equity Shares based on Returns\">Classification Of Equity Shares based on Returns<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/kuvera.in\/blog\/types-of-share-capital\/#Interested_in_how_we_think_about_the_markets\" title=\"Interested in how we think about the markets?\">Interested in how we think about the markets?<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<p><span style=\"font-weight: 400;\">Shares are defined under Section 2(84) of the Companies Act, 2013, as share in the share capital of a company and includes stocks. Shares are issued by companies to raise capital from investors. This capital is intended to further development and growth of the business of the company. A share represents the interest of a shareholder in the company, and this interest is measured for the purpose of liability and dividend. It attaches various rights and liabilities to the shareholder.<\/span><\/p>\n<p>&nbsp;<\/p>\n<p><span style=\"font-weight: 400;\">Shares are considered a type of security. Security is defined under Section 2(80) of the Companies Act, and references to securities as defined under section 2(h) of the Securities Contracts Act, 1956. The shares of any member in a company is considered as movable property according to Section 44 of the Companies Act, 2013 and are considered to be transferable in the manner provided by the articles of the Company.<\/span><\/p>\n<p>&nbsp;<\/p>\n<p><span style=\"font-weight: 400;\">Section 45 of the Companies Act, mandates all companies to have a share which would ensure that the shares of the company is distinguished by a distinct number. However, if a share is held by a person who is entered as holder of beneficial interest in such share in the records of a depository, then the same would not be applicable to that extent.<\/span><\/p>\n<p>&nbsp;<\/p>\n<p><a href=\"https:\/\/kuvera.in\/fixed-deposit\/all\"><img loading=\"lazy\" class=\"aligncenter wp-image-13417 size-large\" src=\"https:\/\/kuvera.in\/blog\/wp-content\/uploads\/2022\/07\/FD-Banner_14-July-2022-1024x334.jpg\" sizes=\"(max-width: 640px) 100vw, 640px\" srcset=\"https:\/\/kuvera.in\/blog\/wp-content\/uploads\/2022\/07\/FD-Banner_14-July-2022-1024x334.jpg 1024w, https:\/\/kuvera.in\/blog\/wp-content\/uploads\/2022\/07\/FD-Banner_14-July-2022-300x98.jpg 300w, https:\/\/kuvera.in\/blog\/wp-content\/uploads\/2022\/07\/FD-Banner_14-July-2022-768x250.jpg 768w, https:\/\/kuvera.in\/blog\/wp-content\/uploads\/2022\/07\/FD-Banner_14-July-2022.jpg 1080w\" alt=\"kuvera-fixed-deposit-online\" width=\"640\" height=\"209\" \/><\/a><\/p>\n<p>&nbsp;<\/p>\n<p><strong>Shares are issued in the following manner:<\/strong><\/p>\n<p>&nbsp;<\/p>\n<ul>\n<li><span style=\"font-weight: 400;\"> \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 <\/span><span style=\"font-weight: 400;\">In case of a private company, shares are issued through private placement, meaning they are issued to smaller groups of individuals.<\/span><\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<ul>\n<li><span style=\"font-weight: 400;\"> \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 <\/span><span style=\"font-weight: 400;\">Alternatively, a public limited company floats a new class of shares in the open market through an Initial Public Offering (\u201cIPO\u201d) and later, these are traded on by individuals in the stock exchanges active in the country.<\/span><\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Types_of_Share_Capital\"><\/span>Types of Share Capital:<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">As per Section 43 of the Companies Act, 2013, the share capital of a given company limited by shares are of two types, (a) Equity Share, and (b) Preference Share.<\/span><\/p>\n<p>&nbsp;<\/p>\n<h4><span class=\"ez-toc-section\" id=\"Equity_Share_Capital\"><\/span>Equity Share Capital:<span class=\"ez-toc-section-end\"><\/span><\/h4>\n<p><span style=\"font-weight: 400;\">Equity Share Capital with respect to any company limited by shares means all share capital which is not preference capital, and references the portion of the company\u2019s capital which is raised in exchange for a share of ownership in the company. <a href=\"https:\/\/kuvera.in\/blog\/equity-shares-types-features-and-benefits\/\">Equity shares<\/a> come with voting rights, or with differential rights as to dividend, voting or otherwise, as prescribed from time to time.<\/span><\/p>\n<p>&nbsp;<\/p>\n<h4><span class=\"ez-toc-section\" id=\"Preference_Share_Capital\"><\/span>Preference Share Capital:<span class=\"ez-toc-section-end\"><\/span><\/h4>\n<p><span style=\"font-weight: 400;\">Preference Share Capital, with respect to any company limited by shares means share capital having fixed rate of dividend and carry preferential rights over ordinary equity shares in sharing of profits and also claims over assets of the Company. Investors who buy preferential share capital are placed in higher priority where dividend declaration is concerned, and are the first to receive money at the time of winding up. Investing in preference share, does not give the investor a right to vote, unless the matter directly or indirectly affects them.<\/span><\/p>\n<p>&nbsp;<\/p>\n<p><span style=\"font-weight: 400;\"><a href=\"https:\/\/kuvera.in\/blog\/preference-shares\/\">Preference share<\/a> capital, as per Section 43 of the Companies Act, 2013, means that part of the issued share capital of the company which carries or would carry a preferential right in respect of the payment of dividend, as a predetermined amount or an amount calculated at a fixed rate, and maybe subject to income tax.<\/span><\/p>\n<p>&nbsp;<\/p>\n<p><span style=\"font-weight: 400;\">Further, in the case of winding up of the company or repayment of capital, there exists a preferential right to repayment of the amount of capital paid up or deemed to have been paid up, regardless of a preferential right to payment of any fixed premium or premium on any fixed which is specified in the memorandum or articles of the company.<\/span><\/p>\n<p>&nbsp;<\/p>\n<p><strong>There are different sub-types in preference shares:<\/strong><\/p>\n<p>&nbsp;<\/p>\n<p><strong>Cumulative Preference Shares:<\/strong><\/p>\n<p><span style=\"font-weight: 400;\">Cumulative Preference Shares give their shareholders the right to receive arrears on dividend before any dividend is paid to equity shareholders. For example, if the dividends on preference shares for the two years have not been paid due to market downturn, then preferential shareholders are entitled to receive dividend for those years in addition to the current one.<\/span><\/p>\n<p>&nbsp;<\/p>\n<p><strong>Non-cumulative preference shares:<\/strong><\/p>\n<p><span style=\"font-weight: 400;\">Non-cumulative shares do not entitle their shareholders to claim any outstanding dividend. Such shareholders only earn a dividend once the company earns profits. No dividends are paid for the years of market downturn.<\/span><\/p>\n<p>&nbsp;<\/p>\n<p><strong>Convertible Preference shares:<\/strong><\/p>\n<p><span style=\"font-weight: 400;\">Preference shares which are convertible are known as Convertible Preference Shares. Convertible Shareholders may convert their preference shares into equity shares after a specific period of time, provided that this conversion of shares is authorized by the Articles of Association of the company.<\/span><\/p>\n<p>&nbsp;<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Types_of_Equity_Shares_based_on_Share_Capital\"><\/span>Types of Equity Shares based on Share Capital:<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Based on Share Capital, Equity Shares can be classified as under : &#8211;<\/span><\/p>\n<p>&nbsp;<\/p>\n<p><strong>Authorized Share Capital:<\/strong><\/p>\n<p><span style=\"font-weight: 400;\">Authorized Capital, also called nominal capital, is the maximum amount of capital which a company can raise to fund capital requirements through the issuance of equity shares. Each Company, through its Memorandum of Associations (\u201cMoA\u201d), requires to prescribe the maximum amount of capital that may be raised through the issuance of equity shares however, Companies cannot issue shares of the value more than the Authorized Capital.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Companies may increase the authorized share capital if required, through an Amendment via a resolution passed at a general meeting of the shareholders.<\/span><\/p>\n<p>&nbsp;<\/p>\n<p><b>Issued Share Capital:<\/b><\/p>\n<p><span style=\"font-weight: 400;\">Issued Share Capital, refers to the portion of the Company\u2019s Share Capital which is available for subscription to investors through the issuance of Equity Shares.\u00a0 Issued Share Capital is required to be within the limit of the Authorized Share Capital, and cannot be more than the Authorized Share Capital, as stated in the MoA. The Issued Share Capital can be either equal to or less than the Authorized Share Capital.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Since, a company does not have to issue all of its Authorized Share Capital at once, it may further issue Share Capital in the future, depending on its financing requirements.<\/span><\/p>\n<p>&nbsp;<\/p>\n<p><b>Unissued Share Capital:<\/b><\/p>\n<p><span style=\"font-weight: 400;\">This is the portion of the Authorized Share Capital that has not been issued and is not available for subscription to investors. It is essentially the difference between the Authorized Share Capital and the Issued Share Capital.<\/span><\/p>\n<p>&nbsp;<\/p>\n<p><b>Subscribed Share Capital:<\/b><\/p>\n<p><span style=\"font-weight: 400;\">Subscribed Share Capital is the Issued Share Capital which has been subscribed to by investors. Once investors have subscribed to the Issued Capital. Capital is increased when investors have subscribed to the shares of the Company. Subscribed Shares can only be equal to or less than the issued share capital.<\/span><\/p>\n<p>&nbsp;<\/p>\n<p><b>Reserve Share Capital:<\/b><\/p>\n<p><span style=\"font-weight: 400;\">Reserve Share Capital is the Capital which is reserved for the purposes of liquidating or winding up. A company may establish Reserve Capital upon a 3\/4<\/span><span style=\"font-weight: 400;\">th<\/span><span style=\"font-weight: 400;\"> Majority vote in favour of this special resolution. The Articles of Association cannot be altered to avail Reserve Share Capital at any time once they have been constituted. Reserve Share Capital cannot be used to obtain collateral for loans either, and is subject to the winding up of the Company to be available.<\/span><\/p>\n<p>&nbsp;<\/p>\n<p><b>Called-up Capital:<\/b><\/p>\n<p><span style=\"font-weight: 400;\">Called-up Capital is the investor\u2019s payment upon subscription to the Issued Share Capital.\u00a0 Where, the capital paid by the investor is not paid in lumpsum, but rather, is paid in instalments. Therefore, called up capital is the portion of subscribed capital that the company demands the investor to pay upon subscription.<\/span><\/p>\n<p>&nbsp;<\/p>\n<p><b>Paid- up Capital:<\/b><\/p>\n<p><span style=\"font-weight: 400;\">Paid-up Capital is the amount of money investors pay against its shareholdings in the Company. Where, Shareholders usually pay the entire amount at once, subscribed and paid-up capital are referred to the same.<\/span><\/p>\n<p>&nbsp;<\/p>\n<h4><span class=\"ez-toc-section\" id=\"Classification_Of_Equity_Shares_based_on_Definition\"><\/span>Classification Of Equity Shares based on Definition<span class=\"ez-toc-section-end\"><\/span><\/h4>\n<p><span style=\"font-weight: 400;\">Based on its Definition, Equity Share Capital can be further classified as under: &#8211;<\/span><\/p>\n<p>&nbsp;<\/p>\n<p><b>Employee Stock Option Plan:<\/b><\/p>\n<p><span style=\"font-weight: 400;\">The <a href=\"https:\/\/kuvera.in\/blog\/esop-definition-benefits-and-how-it-works\/\">Employee Stock Option Plan<\/a> (\u201cESOP\u201d) is an employee benefit plan issued by the Company for its employees to encourage employee ownership in the Company. These Shares are available to the Employee and Directors of the Company, whereby the Employee or Director has the option to purchase these shares at a predetermined price. These Shares cannot however be equated to remuneration of the Employee or Director. ESOPs are an important to maintain liquidity, especially for start ups.<\/span><\/p>\n<p>&nbsp;<\/p>\n<p><span style=\"font-weight: 400;\">These shares can be issued in accordance with the Companies Act, alongwith the Companies (Share Capital and Debentures) Rules, 2014, which is applicable only to unlisted Companies. Listed Companies may issue such shares in accordance with Securities and Exchange Board of India Employee Stock Option Scheme Guidelines.<\/span><\/p>\n<p>&nbsp;<\/p>\n<p><span style=\"font-weight: 400;\">The Company shall issue ESOPs in accordance with Section 62(1) of the Companies Act, and Rule 12 of the Companies (Share Capital and Debentures) Rules, 2014.<\/span><\/p>\n<p>&nbsp;<\/p>\n<p><b>Bonus Shares:<\/b><\/p>\n<p><span style=\"font-weight: 400;\">Bonus shares are fully paid-up share capital, which is issued to current shareholders in addition to their existing shares. The shareholders are exempt from paying for such shares, as they are provided at no cost. Once the Company has accumulated profit and wish to capitalize their reserve and surplus chase, Bonus shares are issued. Bonus shares are considered a good sign for the Company since it is issued to serve a large equity base while the net worth of the Company stays intact.<\/span><\/p>\n<p>&nbsp;<\/p>\n<p><span style=\"font-weight: 400;\">The Conditions laid down for issuing Bonus Shares are:<\/span><\/p>\n<ul>\n<li><span style=\"font-weight: 400;\"> \u00a0 \u00a0 \u00a0 <\/span><span style=\"font-weight: 400;\">Bonus Shares must be mentioned in the Articles of Association (\u201cAoA\u201d) of the Company, wherein Shareholders are mentioned to be eligible to receive Bonus Shares in the AoA. If this is not specified, then the AoA may be altered accordingly by a special majority.<\/span><\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<ul>\n<li><span style=\"font-weight: 400;\"> \u00a0 \u00a0 \u00a0 <\/span><span style=\"font-weight: 400;\">In order to issue Bonus Shares, the Board of Directors, along with higher management must pass a special resolution on the basis of profitability made by the Company. The Special Resolution may be passed on the basis of accumulated profit, and Bonus Shares are issued to all its Shareholders.<\/span><\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<ul>\n<li><span style=\"font-weight: 400;\"> \u00a0 \u00a0 \u00a0 <\/span><span style=\"font-weight: 400;\">The Company has not defaulted in payment of interest or principal in respect of fixed deposits or debt securities issued by it. Further, the Company shall ensure that the Company has made timely payment of statutory dues of the employees such as contribution to provident fund, gratuity, bonus etc.<\/span><\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<ul>\n<li><span style=\"font-weight: 400;\"> \u00a0 \u00a0 \u00a0 <\/span><span style=\"font-weight: 400;\">Partly paid-shares, if outstanding on the date of allotment are made fully paid up by the Company.<\/span><\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<ul>\n<li><span style=\"font-weight: 400;\"> \u00a0 \u00a0 \u00a0 <\/span><span style=\"font-weight: 400;\">The Company shall ensure that the Authorized Share Capital is sufficient to issue Bonus Shares, else the Company shall increase Authorized Capital first.<\/span><\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<ul>\n<li><span style=\"font-weight: 400;\"> \u00a0 \u00a0 \u00a0 <\/span><span style=\"font-weight: 400;\">The Company shall ensure that the reserves created by revaluation of assets are not used for the issuance of Bonus Shares.<\/span><\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<ul>\n<li><span style=\"font-weight: 400;\"> \u00a0 \u00a0 \u00a0 <\/span><span style=\"font-weight: 400;\">The Company shall ensure that the bonus issue is not made in lieu of dividend.<\/span><\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<p><b>Rights Shares<\/b><span style=\"font-weight: 400;\">: Right shares are those shares that a company can provide to its existing shareholders &#8211; at a particular price and within a specific period, giving such shareholders the right of pre-emption. Rights shares are issued to help raise capital but are not mandatory to be issued. Rights shares are issued in accordance with the Companies Act. The Company issuing Rights Shares shall have to comply with the following:<\/span><\/p>\n<p>&nbsp;<\/p>\n<ul>\n<li><span style=\"font-weight: 400;\"> \u00a0 \u00a0 \u00a0 <\/span><span style=\"font-weight: 400;\">Rights Shares are mentioned in the AoA of the Company.<\/span><\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<ul>\n<li><span style=\"font-weight: 400;\"> \u00a0 \u00a0 \u00a0 <\/span><span style=\"font-weight: 400;\">A notice to the shareholders regarding the Rights Shares has to be sent.<\/span><\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<ul>\n<li><span style=\"font-weight: 400;\"> \u00a0 \u00a0 \u00a0 <\/span><span style=\"font-weight: 400;\">This offer should be available for 15-30 days.<\/span><\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<ul>\n<li><span style=\"font-weight: 400;\"> \u00a0 \u00a0 \u00a0 <\/span><span style=\"font-weight: 400;\">The existing shareholders of the Company may renounce or accept this offer.<\/span><\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<ul>\n<li><span style=\"font-weight: 400;\"> \u00a0 \u00a0 \u00a0 <\/span><span style=\"font-weight: 400;\">Number of shares and price of such share has to be informed to the Shareholders.<\/span><\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<p><b>Sweat Equity Shares:<\/b><\/p>\n<p><span style=\"font-weight: 400;\">Sweat Equity Shares are issued by the Company to its Directors (except Independent Directors) or employees of the Company at a discount for consideration other than capital. Sweat Equity Shares are issued for the purpose of contribution to the intellect of the Company, value addition to the employees, etc. In order to issue Sweat Equity Shares, the Company must follow these compliances:<\/span><\/p>\n<p>&nbsp;<\/p>\n<p><span style=\"font-weight: 400;\">Special Resolution must be passed by the members and the proposal of issuing such shares must come from the Board of Directors.<\/span><\/p>\n<p>&nbsp;<\/p>\n<ul>\n<li><span style=\"font-weight: 400;\"> \u00a0 \u00a0 \u00a0 <\/span><span style=\"font-weight: 400;\">Class of shares, Number of Shares, and to whom such shares may be issued.<\/span><\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<ul>\n<li><span style=\"font-weight: 400;\"> \u00a0 \u00a0 \u00a0 <\/span><span style=\"font-weight: 400;\">Price for such shares to be decided by the Board of Directors.<\/span><\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<ul>\n<li><span style=\"font-weight: 400;\"> \u00a0 \u00a0 \u00a0 <\/span><span style=\"font-weight: 400;\">The Company issuing such shares must have commenced business at least a year prior.<\/span><\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<ul>\n<li><span style=\"font-weight: 400;\"> \u00a0 \u00a0 \u00a0 <\/span><span style=\"font-weight: 400;\">Maximum shares which can be issued may be 15 percent of paid up share capital or 5 crores, whichever is higher.<\/span><\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<ul>\n<li><span style=\"font-weight: 400;\"> \u00a0 \u00a0 \u00a0 <\/span><span style=\"font-weight: 400;\">Notice to share holders prior to the issuance of sweat equity shares.<\/span><\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<p><strong>Voting and Non-Voting Shares:<\/strong><\/p>\n<p><span style=\"font-weight: 400;\">Equity Shares generally give its Shareholder the right to vote. Section 47 of the Companies Act, determines the extent that the Shareholder holding Equity Share shall have in voting on matters of the Company. This means that Companies may issues Equity Shares which confer differential or no voting right at all to such Shareholders, subject to the Company being a private limited company and having such provisions under its AoA.<\/span><\/p>\n<p>&nbsp;<\/p>\n<h4><span class=\"ez-toc-section\" id=\"Classification_Of_Equity_Shares_based_on_Returns\"><\/span>Classification Of Equity Shares based on Returns<span class=\"ez-toc-section-end\"><\/span><\/h4>\n<p><span style=\"font-weight: 400;\">Based on returns, Equity Shares are broadly categorized as follows:<\/span><\/p>\n<p>&nbsp;<\/p>\n<p><span style=\"font-weight: 400;\"><strong>Dividend Shares:<\/strong> When a Company earns a profit or surplus, it may pay a proportion of the profit as dividend to its Shareholders. Such companies which pay dividends are usually well-established with steady net incomes, and are an ideal investment avenue for risk-averse investors.<\/span><\/p>\n<p>&nbsp;<\/p>\n<p><span style=\"font-weight: 400;\"><strong>Growth Shares:<\/strong> Shares which are associated with companies that have extraordinary growth rates are referred to as Growth Shares. While such companies might not provide dividends, the value of their shares increase exponentially providing staggering capital gains to shareholders. Such types of shares are suitable for investors with high-risk aptitiude.<\/span><\/p>\n<p>&nbsp;<\/p>\n<p><span style=\"font-weight: 400;\"><strong>Value Shares:<\/strong> Shares which are traded at prices lower than their intrinsic value, are known as Value Shares. Investors may anticipate the prices of Value Shares to appreciate over some time, thus providing them with a better share price.\u00a0<\/span><\/p>\n<p>&nbsp;<\/p>\n<h4><span class=\"ez-toc-section\" id=\"Interested_in_how_we_think_about_the_markets\"><\/span>Interested in how we think about the markets?<span class=\"ez-toc-section-end\"><\/span><\/h4>\n<p>Read more: <a href=\"https:\/\/kuvera.in\/blog\/category\/zen-and-the-art-of-investing\/\" target=\"_blank\" rel=\"noopener noreferrer\"><strong>Zen And The Art Of Investing<\/strong><\/a><\/p>\n<p>Watch\/hear on YouTube:<\/p>\n<p>&nbsp;<\/p>\n<div class=\"embed-container\"><iframe src=\"https:\/\/www.youtube.com\/embed\/N1li1d9X0jw\" frameborder=\"0\" allowfullscreen=\"allowfullscreen\" data-mce-fragment=\"1\"><span data-mce-type=\"bookmark\" style=\"display: inline-block; width: 0px; overflow: hidden; line-height: 0;\" class=\"mce_SELRES_start\">\ufeff<\/span><\/iframe><\/div>\n<p>&nbsp;<\/p>\n<p>Start investing through a platform that brings goal planning and investing to your fingertips. Visit <a href=\"https:\/\/app.kuvera.in\/\">Kuvera.in<\/a> to discover <a href=\"https:\/\/kuvera.in\/blog\/direct-plans-better\/\">Direct Plans<\/a> and <a href=\"https:\/\/app.kuvera.in\/explore\/fixed-deposit\/c\/all\">Fixed Deposits<\/a> and <a href=\"https:\/\/kuvera.in\/user\/login\">start investing today.<\/a>#MutualFundSahiHai #KuveraSabseSahiHai!<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Shares are defined under Section 2(84) of the Companies Act, 2013, as share in the share capital of a company and includes stocks. Shares are issued by companies to raise capital from investors. This capital is intended to further development and growth of the business of the company. A share represents the interest of a [&#8230;]<\/p>\n<p><a class=\"btn btn-secondary understrap-read-more-link\" href=\"https:\/\/kuvera.in\/blog\/types-of-share-capital\/\">Read More&#8230;<\/a><\/p>\n","protected":false},"author":11,"featured_media":15746,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_mi_skip_tracking":false},"categories":[99,679],"tags":[892,924,1456,1454,1455,1457],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v20.6 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Different Types of Share Capital - Kuvera<\/title>\n<meta name=\"description\" content=\"Share Capital or equity capital is the amount of money invested by a company&#039;s shareholder for the use of business.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/kuvera.in\/blog\/types-of-share-capital\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Different Types of Share Capital - 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