Definitions: meaning of ‘stock’
TCGA92/S288 provides `shares’ includes stock. In this context ‘stock’ does not mean loan stock or any form of loan capital. Stock is another form of share capital. A company cannot issue stock units but it can convert shares into stock. The stock units then represent a nominal amount of the share capital. For example, if £1 ordinary shares are converted to stock they will become £1 stock units.
One of the advantages of converting shares to stock used to be that shares had to be numbered but stock units did not. This made it considerably easier to effect transfers, particularly on the Stock Exchange, as the sale documents merely needed to refer to an amount of stock and not the numbers of particular shares. This advantage was diminished when the 1948 Companies Act dispensed with the need to number shares.
A remaining advantage of stock is that unlike shares it can be divided into fractions. For example a stock holder can hold £1.60 worth of £1 stock units.