20 Mar 2018

What is Equity Shares

Finance feed by:

CA Nisha Bagla
B.com (Hons),CA
CA in Practice    •    15 Year 8 Month  experience

Equity shares were earlier known as ordinary shares. The holders of these shares are the real owners of the company. They have a voting right in the meetings of holders of the company. They have a control over the working of the company. Equity shareholders are paid dividend after paying it to the preference shareholders.The rate of dividend on these shares depends upon the profits of the company. They may be paid a higher rate of dividend or they may not get anything.

These shareholders take more risk as compared to preference shareholders.Equity capital is paid after meeting all other claims including that of preference shareholders. They take risk both regarding dividend and return of capital. Equity share capital cannot be redeemed during the life time of the company.

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