Share (finance)
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In financial markets, a share is a unit of account for various financial instruments including stocks (ordinary or preferential), and investments in limited partnerships, and REIT's. The common feature of all these is equity participation (limited in the case of preference shares).
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[edit] National variations
[edit] United States
In American English, the plural stocks is widely used instead of shares, in other words to refer to the stock (or perhaps originally stock certificates) of even a single company. Traditionalist demands that the plural stocks be used only when referring to stock of more than one company are rarely heard nowadays.
[edit] Shareholders and dividends
The income received from shares is called a dividend, and a person owning shares is called a shareholder.
[edit] Valuation
Shares are valued according to various principles in different markets, but a basic premise is that a share is worth the price at which a transaction would be likely to occur were the shares to be sold. The liquidity of markets is a major consideration as to whether a share is able to be sold a any given time. An actual sale transaction of shares between buyer and seller is usually considered to provide the best prima-facie market indicator as to the 'true value' of shares at that particular moment.
[edit] Tax treatment
Tax treatment of dividends varies between territories. For instance, in India, dividends are tax free in the hands of the shareholder, but the company paying the dividend has to pay dividend distribution tax at 12.5%. There is also the concept of a deemed dividend, which is not tax free. Further, Indian tax laws include provisions to stop dividend stripping.
[edit] Voting and non-voting shares
A share of stock is one of a number of equal portions of the capital of a company, entitling the owner to a proportion of distributed, non-reinvested profits known as dividends, and to a portion of the value of the company in case of liquidation. Shares can be voting or non-voting, meaning they either do or do not carry the right to vote at shareholder meetings, for instance to elect the board of directors. Whether this right exists often affects the value of the share. Voting and non-voting shares may be designated in various ways, for instance as Class A and B shares respectively. Non-voting shares were formerly quite common in the UK but are now virtually non-existent.
[edit] Share certificates
Investors were given share certificates as evidence of their ownership of shares but certificates are not always issued nowadays. Instead, the ownership may be recorded electronically by a system such as CREST.
