Company Law

Difference Between Stock And Share

STOCK – By stock is meant the total amount of the fully paid up value of shares which can later be divided into small units so that any amount of the share value can be transferred to others. According to Section 2(84) of the Companies Act, 2013, ‘share’ means share in the share capital of a company, and includes stock, except where a distinction between stock and shares is expressed or implied.

The above definition does not clarify the difference between stock and shares- it only states that the provision of the Act applies equally to stock as well as shares, when the distinction between the two is expressed or implied

SHARE – The literal meaning of share’ is part’ or ‘portion’. But in the context of share-capital of a company, share has a special meaning. The share capital of a company is divided into different classes of parts and each part is called a share. For example, if the capital of a company is 50,00,000, and is divided into 50,000 parts of 100 each, then each such part of the capital would be called a share.

Difference Between Stock And Share

Sr. No.Basis of DifferenceStockShare
1Issue Stock cannot be issued at the company’s formation. Only when the shares are fully paid-up they can be converted into stock. Shares are issued at the formation of the company in order to acquire capital for the company for its business.
2Nominal Value Stock has no nominal value. Its value can be split as per the requirement. A share has a definite nominal value.
3Paid-up Value Stock is always fully paid-up. Share can be partly or fully paid-up.
4Transfer Stock can always be split into parts of any denomination. A share is always transferred as a whole; it cannot be split in parts.
5Definite Number Stock has no definite number. Each share carries a definite number.
6Registration Registration of stock is not necessary-but the conversion of shares into stock must be informed to the Registrar of Companies. It is mandatory to get the transfer of shares registered with the company.
7Membership A stock-holder is deemed to be a member of the company only for some specific purposes. A shareholder is a member of the company, and the share-certificate certifies that.
8Provisions The articles of a company must have a provision for the company to issue any stock; and it is issued by an ordinary resolution of the company. Shares are issued by a resolution of the Board of Directors of a company.

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