Difference Between Share and Stock
Dr. Tanmoy Mukherji
Advocate
Difference Between Share and Stock
Tanmoy Mukherji
Advocate
In Company Law, the terms Share and Stock are related but not identical. A share represents a specific unit of ownership in a company, while stock represents a collection of fully paid shares converted into a consolidated fund.
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Basis |
Share |
Stock |
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Meaning
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A share is the smallest unit of share capital of a company. |
Stock is the aggregate of fully paid shares converted into one consolidated amount.
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|
Definition
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Defined under Section 2(84) of the Companies Act, 2013 as a share in the share capital of a company.
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Not separately defined but recognized as converted fully paid-up shares.
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Nature
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Has a fixed nominal value (e.g., ?10 or ?100).
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No nominal value; it represents a combined value of many shares.
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Numbering
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Each share has a distinct number.
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No distinctive number.
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Paid-up Status
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Can be partly paid or fully paid.
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Must always be fully paid-up.
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Transfer
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Transferred as a whole unit only.
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Can be transferred in fractions (e.g., ?200 out of ?1000 stock).
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Issue
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A company issues shares directly to investors.
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A company cannot issue stock directly; shares must first be issued and then converted into stock by resolution.
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Original Issue
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Original issue is possible.
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Original issue is not possible.
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Denomination
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Always in fixed denominations (?10 share, ?100 share).
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Any value portion can be transferred.
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Example
If a company has 100 shares of ?10 each, it may convert them into ?1000 stock. After conversion, a shareholder can transfer ?150 stock, which is not possible with shares.
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