What is a Company and Shares?
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What is a Company?
Company is an artificial person formed by a group of persons for a particular objective.
A Company doesn’t have any physical presence, it is only a company on legal documents.
In India, a company can only be a legal company if it is formed under Indian Companies Act 1956 or Companies Act 2013.
A company also have it’s own legal entity, it can sue or can be sued in it’s own name.
The Life of a company doesn’t depend on the life of it’s members, as members can be changed from time to time but company remains their for unlimited time until it’s wound up by its members.
What is a Share?
A Share or a stock is a document issued by a company which entitles it’s holder as the owner of the company, and the holder also enjoys the profits of the company in form of dividends.
The holder of shares can also get the capital gain from the shares by selling them in the stock market at higher price than the price at which he bought them.
In the same way, the holder also run a risk of making capital loss if he sells his shares in the stock market at the lower price than the price at which he bought them.
So, a holder of shares enjoys returns on his shares in the form of dividends and the capital gains.
Bottom Line
So, in this lesson you have learned about What is a Company and Shares, like how company and shares are formed, also how you can get returns from the shares.
Company and shares are one of the great mode of investing money in, but you need to work on researching the best company and shares to invest your money and get maximum returns.
So, keep on learning about company and shares by subscribing to the free newsletter service below, so that you can get all the informative stuff related to stock market directly in your inbox.
Hi, I’m Managing Director at Gurpreet Saluja Financial Services where I help my investors to invest in mutual funds and achieve their financial goals. I’m also a Value Investor and here I write about Personal Finance & Investing.
