Definition of Share

Definition of Share
According to financial terminology the share is regarded as a unit of account that can represent several monetary instruments, such as stocks, REITs, mutual funds, or limited partnerships. In Great Britain the term “shares” usually refers to stocks.
In the United States, the term stocks are used to refer to the shares or even the stock certificates that may be provided by a particular company. However, as per the conventional use, the term stocks usually refers to shares.

The people who have ownership over a share are called the shareholders. The shareholder could be an individual or an organization.

The earning that the holder of a share makes from his or her shares is called the dividend.

Dividends are actually part of the profits of the company whose shares may be held by the respective holder. These are non-reinvested profits.
Concept of Share
In practical terms, shares are individual pieces representing an equal stake in the capital of a business organization. The number of shares make the respective holder eligible to receive a certain part of the profits made by that company. The shares also help the respective holders to be able to lay claim to a part of the worth of the specific company. This is applicable, however, only when there is liquidation.

Voting and Non Voting Shares
There are two kinds of shares in operation: voting and non voting shares. The owners of the voting shares are eligible to vote on the board of directors or on corporate policies, while the owners of the non-voting shares may not. Whether shares are voting or non-voting often influences their price. These shares are also called Class A and B shares.

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Last Updated on : 26th June 2013

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