Settling Day Day

Settling Day Day

Settling-day, the day on which payment has to be made for dealings in Stock Exchange securities which have taken place since the previous settling-day or account day. Settling-days fall on Tuesdays and there are twenty-four in a year, so that there are twenty accounts of a fortnight in duration and four of three weeks.

Share Certificate, document supplied by a company to each shareholder showing the number and value of the shares he holds.

Shares, documents indicating that the holder participates in the ownership of a company and has a claim to part of its profits. The type and number of shares held define the rights of the holder and the extent of his ownership.

Although there are many types of share they are all variants of two main classes preference and ordinary shares, sometimes known as prior and equity capital.

Most types of preference share entitle the holders to a stated amount of the company's profits, which must be paid before dividends are distributed to ordinary shareholders. A 4 per cent preference shareholder, for example, would be entitled to thaw from the company's profits, before ordinary shareholders, for every £100 invested. Although preference shareholders have first claim on profits when they are earned, they have no claim on the company in bad years when it fails to make profits. Most preference shares are issued with cumulative rights' entitling the holder not only to dividends for the current year but also for previous years if they were not paid. Normally preference shareholders have no voting powers in the election of company directors.

The ordinary shareholder receives not a fixed amount of profit but whatever is left after preference shareholders have been paid. In good years this may be a lot, in lean years little or nothing. If the company is brought to an end, the ordinary shareholder usually ranks behind the preference shareholder in the repayment of capital. Since ordinary shareholders bear more risk than other owners of the company they have the right to elect the directors to manage it.

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