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Equity shares

also knonwn as common or ordinary shares.


it represents ownership of the co.
holders are the real owners of the co,
control over the working capital of the co.
eqty sh are padi dividend after paying it to the prefrence sh holders.
rate of dividend depends on the profit made by the company. it may b higher or
nthng.
risk bearing mre thn prefrence s captial.

features \ charactestics
maturity
claim to income
claim on assets
right to control over wrking cap
right to vote
pre emptive right
limited liability.

advantages
ES dnt create ny obligation to pay a fixed rate of dividend.
ES can be issued widout creatuing ny charge over asstes of the co,
permannent source of capital nd co has nt to repay it except liquidation.
ES r da real owners of the company having voting rights
Maxixmmum profit , maximum dividends nd appreciation in the value of sharess to
the ES holders.

disadvantages
if only ES r issued, da co cant tk advantage on trade on equity.
as E capital cant be reedemd , danger of over capitalisation.
ES holdrs can put obstacles in mgmt by manipulaiton n organising themselves
During a certain time period, higer dividens have to be paid leading ti increase
in the value shares i in the market.
investors who desired to invest in safe securities wid fixed income are ignored.