Share capital of a joint stock corporation is raised by issue of shares which have a face value. Section 2 (46) of Indian Companies Act, 1956, defines share as “share in the share capital of the companies and includes stock, except when a distinction between stock and share is expressed or implied.” When shares have been fully paid-up they may, if so authorized by the articles, be turned into stock by the company in general meeting (Section 94 (i) C). Stock is merely a name for the aggregate ownership. This is the most convenient method of representing ownership and makes the transfer of ownership easier.
The price at which a share is bought and sold in the stock market is called the Market Price which may be higher or lower than the face value of the share. Whereas Book Value of share is the value arrived at by dividing the Owners’ Equity (Share Capital + Reserves & Surplus) by Number of shares.
