What are Equity shares?

We will know about the What are Equity shares?

What are Equity shares?

Meaning:

Equity shares normally known as common or ordinary share fractional part of ownership of the company. Those who have equity share has right to vote.

Features of equity share

1. Equity Shareholder posses the voting right.

2. Dividend for the equity shareholder depend upon the net profit they earns.

3. Equity share remain with company until the company get closed.

Types of Equity Shares Capital

1. Authorized Share Capital.
2. Issued Share Capital
3. Subscribed Share Capital
4. Paid Up capital
5. Right Share
6. Bonus Share
7. Sweat Equity Share

Advantage of Equity Share Capital

Following are the advantage of equity Share capital

1. It is not compulsory to distribute dividend to equity shareholder. OT there is no rule of distributing dividend unlike preference share.
2. It is perpetual source of fund. The company only need to refund to its share holder at the time liquidation.
3. The Equity shareholder are the owner of the company who has voting rights.
4. Has right to participate in management decision.

Disadvantage of Equity Share Capital

Following are the disadvantage

1. There is high risk of not getting the return because your are the owner of the company.
2. When the company earns more profits, than company will distribute bonus share. As a result there will be more share which will lead to the speculation of share price in Nepal.

Other Important Links

Comparison of Equity Share VS Preference Share Capital: CLICK HERE