The unit of the ownership in a company is a share (Text II). When only one type of share is issued it is called an ordinary share. It may be regarded as the basic element of ownership. It carries voting rights and is the means of exercising control over the business. Market price of ordinary share is based on several factors.
The second type of the shares is “preference shares ”. The holders of them are granted special rights and privileges.
After receiving the preference dividend at the fixed rate, preference shareholders are not entitled to participate in any further dividends declared by the company in that year.
A company may issue redeemable preference shares, shares at a premium and shares at a discount and shares issued for assets other than cash.
The directors have power to forfeit and reissue shares.
Ownership of a capital interest in a company is evidenced by certificates.