VIDYA BHARTI EDUCATIONAL INSTITUTIONS

EQUITY SHAREShttp://vidyabharti.in/

INTRODUCTION

WHAT ARE EQUITY SHARES…?

An equity share, commonly referred to as ordinary share also represents the form of fractional or part ownership in which a shareholder, as a fractional owner, undertakes the maximum entrepreneurial risk associated with a business venture. The holders of such shares are members of the company and have voting rights.The holders of such shares are members of the company and have voting rights. A company may issue such shares with differential rights as to voting, payment of dividend, etc. 

MERITS OF EQUITY SHARES Company need not have the forced obligation to pay dividend to

equity shareholders.

Equity share is a permanent source of funds which facilitate flexibility in usage of funds.

The obligation to repay the equity capital arises only at the time of liquidation of the company.

The shareholders can participate in the management of the company through voting rights.

Equity shares can be issued without creating any charge over the assets

DEMERITS OF EQUITY SHARES Equity shares always associated with the expectations of the investors.

It is practically a difficult task to fulfill the expectations of the investors.

Equity shareholders have to bear all the losses at the time of liquidation. Interruptions of many persons are involved in the company working. So, in some cases, it creates delay in decision-making.

When the finance has to be raised for less risky projects, then this is not a good source of raising finance. If only equity shares are issued then the company can not avail the benefits of trading on equity.

Investors who have a desire to invest in safe or fixed returns have no attraction of such shares.

FEATURES OF EQUITY SHARES

1.Right to income

2.Right to control

3.Pre-emptive Right

4.Right to Liquidation

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