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      Share Tips:

      In financial markets, a share is a detachment of account for various investments. It often means the stock of a corporation, but is also used for composite investments such as mutual funds, limited partnerships, and real estate investment trusts.

      Business organization issue shares which are offered for sale to raise share capital. The owner of shares in the corporation is a stockholder (or shareholder) of the corporation. A share is an indivisible unit of capital, expressing the ownership relationship b/w the company and the shareholder. The denominated value of a share is its face value, and the total of the face value of issued shares represent the capital of a company, which may not reflect the market value of those shares.

      The income received from the ownership of shares is a dividend. The process of purchasing and selling shares often involves going through a broker as a middle man


      Valuation:

      Shares are valued according to many principles in different markets, but a basic premise is that a share is worth the cost 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 even if a share is able to be sold at any given time. An actual sale transaction of shares between seller and buyer is usually considered to provide the best prima facie market indicator as to the "true value" of shares at that particular time.


      Terminology:

      · Shares outstanding are those that are empower, issued, and held by third parties. The number of shares outstanding times the share cost gives the market capitalization of the company, which if the trading price held constant would be enough to purchase the company.

      · Treasury shares are authorized, issued, and held by the company itself.

      · Issued shares is the merge of shares outstanding and treasury shares.

      · Shares authorized include both issued (by the board of directors or stockholders) and unissued but authorized by the company's constitutional documents.


      Tax Treatment:

      Tax treatment of dividends varies b/w tax jurisdictions. For instance, in India, dividends are tax free in the hands of the stockholder, but the company paying the dividend has to pay dividend distribution tax at 12.5%. There is also the concept of a deemed profit, which is not tax free. Further, Indian tax laws include provisions to stop dividend stripping.


      Share certificates:

      Historically, Traders were given share certificates as evidence of their ownership of shares. In modern times, certificates are not always given and ownership can be recorded electronically by a system such as CREST(securities depository).


      Author
      Name: Anik Singh
      Company: Research via
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