Report No. 110
27.8. Defect in the terminology of section 170.-
The terminology of section 170 seems to suffer from a serious deficiency, inasmuch as it uses the words "stock in a joint stock company", and omits to mention 'shares', though illustrations (ii) to (iv) to the section do mention shares. To an ordinary person, the word 'stock' would not include 'shares'. prima facie, it appears desirable that shares should be continued specifically in the section.
The legislative usage in the Companies Act may be referred to in this context. Under that Act1, 'stock' is the aggregate of fully paid up shares legally consolidated, portions of which aggregate may be transferred to split up into fractions of any amount of shares. 'Share' means share in the share capital of the company and includes stock, except when a distinction between stock and share is expressed. Where the shares have been fully paid up, they may be turned into stock, and notice must be given to the Registrar.
The term 'Joint Stock Company' is defined by the Companies Act2, as a company having a permanent paid up or a nominal share capital of a fixed amount divided into shares, also of fixed amount, or held and transferable as stock, or divided and held partly in the one way and partly in the other, and formed on the principle of having, for its members the holders of those shares or that stock, and no other person.
1. Section 566, Companies Act, 1956.
2. Section 566, Companies Act, 1956.