An equity share is a basic term that associates with a company. Let us begin the article by knowing the meaning of equity shares.
What are Equity Shares?
Equity shares are also termed as ordinary shares of the company. The holders of equity shares have the right to vote in the meetings of the company. They are the real owners of the company. The dividend payment is first made to preferential shareholders and later to equity shareholders. However, the right to control and manage the company lies in the hands of equity shareholders.
Let us have a look at some of the features of equity shares.
Features of Equity Shares
- They bear the highest risk as they are the owners of the company.
- They can be transferred from one person to another with or without any consideration.
- They are permanent in nature.
- The rate of dividendis not fixed for equity shareholders.
- They manage the affairs of the company.
Let us now have a look at some of the advantages of equity shares.
Advantages of Equity Sharesfrom Shareholder’s Point of View
- Equity shareholders are the real owners of the company and have the voting rights.
- During profits, equity shareholders gain a lot in the form of higher dividend and increase in the value of shares.
Advantages of Equity Shares from Company’sPoint of View
- They can be issued without mortgaging or creating any charge on the assets of the company.
- There is no obligation to pay adividend on equity shares. Dividend needs to be paid only if there are profits.
- It is the permanent source of income for the company that needs to be repaidonly at the time of liquidation.
Conclusion
Trading and investing in equity shares is hugely popular. Stock broker Indira Securities provides all financial services related to equity shares. Our clients can avail our services by applying for an IPO or investing/trading in equity markets. Open a demat account with us and we will help you in identifying growth stocks for your portfolio. If you have any query, you can reach us via call or email.
