Business Studies

What is equity share? Explain the features of equity shares.


SOLUTION
  • An equity share, normally known as the ordinary share is part ownership where each member is a fractional owner and initiates the maximum entrepreneurial liability related to a trading concern. These types of shareholders in any organization possess the right to vote.
  • The main features of equity shares are:

1. They are permanent in nature

2. Equity shareholders are the actual owners of the company and they bear the highest risk.

3. Equity shares are transferable, i.e. ownership of equity shares can be transferred with or without consideration to other people.

4. Dividend payable to equity shareholders is an appropriation of profit.

5. Equity shareholders do not get a fixed rate of dividends.



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