Equity share commonly referred to as ordinary share. It is also represents the form of fractional or part ownership in which a shareholder, as a fractional owner, it undertakes the maximum entrepreneurial risk associated with a business venture. Equity shares were earlier known as ordinary shares. The rate of dividend on these shares depends upon the profits of the company. Equity capital is paid after meeting all other claims including that of preference shareholders.
- Equity shares do not create any obligation to pay a fixed rate of dividend.
- Equity shareholders are the real owners of the company who have the voting rights.
- It is a permanent source of capital and the company has to repay it except under liquidation.
- Equity shares can be issued without creatingany charge over the assets of the company.
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