Different Classes of Shares and the Benefits and the Disadvantages of Each Type of Shares.
First, we will mention about the purpose of this assignment, which is the benefit that we can gain from doing this project. From this project, it helps us to know the types of shares available in a company, definition of shares and the advantages and disadvantages of shares. From the information, this will enable a person who have interest invest in a company, purchase the shares that are suitable for them, based on the comparison between the advantages and disadvantages of each type of shares. Other than that, we can know the rights that attached to the shares.
On the other hand, we will mention that under what relevant case law or relevant sections, the rights of the shareholders will be changed or affected. These circumstances are significant important to those shareholders who want their interest to be protected. For an example, when a company is going to winding up and under the normal situation, preference shareholders will have no right to participate in the surplus assets and profits but under when Section 66 Companies Act 1965, he has the right on it.
Lastly, this project will give a fundamental or basic knowledge of each type of shares, the rights as being shareholders, which is useful in future, if we wish to success in our business field.
Definition of shares
According to Borlands Trustee v Steel Bros Co Ltd (1901), defines shares as the interest of a shareholder in the company measured by a sum of money, for purpose of a liability in the first place and of interest in the second but also consisting of a series of mutual covenants entered into by all the shareholders inter se.
According to Section 4 Companies Act 1965 (hereinafter referred as CA’65) defines share as share in share capital of a corporation and includes stock except where a distinction between stock and shares is expressed or implied.
In short, shares means that is the capital raised by a corporation, through the issuance and sale of shares.
Section 98 CA’65 mentions the