QS Study

Stock

Share and stock are known as near about same meaning word and offers to seem to be similar. Someone may think the share is stock. But the entire share is not stock. If the total capital of Joint Stock Company is being divided into various units or divided into various units holding different rounding amount is called stock. After collecting all the allotted share capital, the company has to be divided its total or some portion of the collected capital into a various unequal small portion for transactional advantage. This small amount is to be called as stock.

For example, if a share price is $100, all the shares will be of this price and cannot be sold infraction rather whole amount in $ 100 but stocks may be of $ 10, $ 20. $ 50, or $ 100 and be sold at any fraction of these amounts. All the paid-up capital may be transformed into the stock of any amount each and it again may be turned into share.

  • Companies Act: “A Company can convert all or any of its paid-up shares into stock”.
  • Lord Hatherley: “It is simply a set of shares put together in a bundle.”

If the company is to convert its capital info stock (there must be a provision in the Articles of Association regarding the conversion), need to be taken the decision in the general meeting of the company. There is also the provision of incoming the registrar within fifty days after the conversion by letter. After completing the conversion of shares into stocks, it has to mention the amount of stock for each member in the annual report of the company. There is a state that whether the shares of the company converted into stock, the interest of the shareholders remains constant.

So, the stock is also a portion of capital which is sold in the capital market and gradually shares are not but stocks are sold in the capital market.