What is Equity Shares?

Equity shares are those shares which are ordinary in the course of company's business. They are also called as ordinary shares. These share holdersdo not enjoy preference regarding payment of dividend and repayment of capital.Equity shareholders are paid dividend out of the profits made by a company.

Features

1. Equity share capital remains permanently with the company. It is returned only when the company is wound up.
2. Equity shareholders have voting rights and elect the management of the company.
3. The rate of dividend on equity capital depends upon the availability of surplus funds. There is no fixed rate of dividend on equity capital.

Advantages

1. Equity shares do not create any obligation to pay a fixed rate of dividend.
2. Equity shares can be issued without creating any charge over the assets of the company.
3. It is a permanent source of capital and the company has to repay it except under liquidation.
4. Equity shareholders are the real owners of the company who have the voting rights.