ABSTRACT
A literal construction of the word ‘share’ is apt to be misleading in relation to the present day registered company. The purchase of shares in a company does not mean that the shareholder has a ‘share’ in the property of the company. The company’s property is owned both legally and beneficially by the company, so shareholders are not joint owners of the company’s property,1 nor can a shareholder even be said to have an equitable interest in the company property. The most famous definition of a share is that of Farwell J in Borland’s Trustee v Steel,2 where he states that:
This definition characterises the shares as a bundle of rights stemming from the s 14 contract. Typical of the rights which the shareholder enjoys are the rights to vote, to participate in dividends when a distribution is made and to the return of capital when the company is wound up. There is no doubt that, from this bundle of contractual rights, the share has emerged as a piece of personal, intangible property, that is to say, it is a chose in action. It can be owned, bought and sold, mortgaged and it will form part of the estate of a deceased person. Shares can also be held on trust, thus separating the legal from the equitable, beneficial ownership of them.
