A Share is a unit of ownership in a company, representing a proportionate interest in its capital. When individuals purchase shares, they become shareholders and acquire certain financial and ownership rights.
Companies issue shares to raise capital for business expansion, operational activities, debt repayment, and long-term investments.
Shares can be purchased during public offerings or traded on stock exchanges such as the NSE and BSE.
Key features of shares include:
- Ownership: Shareholders own a proportionate interest in the company based on the number and class of shares held.
- Equity Shares: These generally provide voting rights and opportunities to earn dividends and capital gains.
- Preference Shares: These provide preferential rights regarding dividend payments and capital repayment, typically with limited voting rights.
- Dividend Income: Shareholders may receive a portion of company profits when dividends are declared.
- Capital Appreciation: Investors can earn profits if the market price of their shares increases.
- Limited Liability: Shareholders' liability is generally restricted to any unpaid amount on their shares.
- Market Liquidity: Shares listed on stock exchanges can generally be bought and sold, subject to market conditions.
For example, an investor purchasing 100 equity shares at ₹500 each invests ₹50,000 in a company.
Shares enable investors to participate in business ownership and potentially build long-term wealth.
However, shareholders face market volatility, uncertain dividends, and the possibility of losing their investment.