Question

What are equity shares ? Discuss its various features.

Answer 1

Equity shares represent the ownership of a company and do not carry any special or preferential rights in the payment of annual dividend or repayment of capital. It is the most important source of raising long term capital by a company.

Features of Equity Shares
(i) Basis for loans—Equity share capital is the basis on which debts are taken by the company. Equity share capital increases the confidence of the creditors

(ii) Control—Equity shareholders have control over the activities of the company through voting rights given to them in proportion to their share holdings.

(iii) Primary risk bearers—Equity share holders are the primary risk bearers, during losses no dividend is paid to them.