What is Equity Shares and Its Features?

What is Equity Shares and Its Features?
Equity shares also known as ordinary shares, which means other than preference shares. Equity shareholders are the real owners of the company. They have a control over the management of the company. Equity shareholders are eligible to get dividend if the company earns profit. Equity share capital cannot be redeemed during the lifetime of the company. The liability of the equity shareholders is the value of unpaid value of shares.

Equity shares consist of the following important features:

#1. Majority of the shares
It have permanent nature of capital, which has no maturity period. It cannot be redeemed during the lifetime of the company.

#2. Residual claim on income
Equity shareholders have the right to get income left after paying fixed rate of dividend to preference shareholder. The earnings or the income available to the shareholders is equal to the profit after tax minus preference dividend.

#3. Voting rights
Equity shareholders have rights to voting in the meeting of the company with the help of voting right power, they can change or remove any decision of the business concern. They only have voting rights in the company meeting and also they can nominate proxy to participate and vote in the meeting instead of the shareholder.

#4. Residual claims on assets
If the company wound up, the ordinary or equity shareholders have the right to get the claims on assets. These rights are only available to the equity shareholders.

#5. Pre-emptive right
Equity shareholder pre-emptive rights. The pre-emptive right is the legal right of the existing shareholders. It is attested by the company in the first opportunity to purchase additional equity shares in proportion to their current holding capacity.

#6. Right to control
Equity shareholders are the real owners of the company. Hence, they have power to control the management of the company and they have power to take any decision regarding the business operation.

#7. Limited liability
Shareholders are having only limited liability to the value of shares they have purchased. If the shareholders having fully paid up shares, they have no liability.

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