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Advantages And Disadvantages Of Equity Share

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Shares might be the one of the simplest financial products which can invest in business but there are some different types of shares with different characteristics. It is also important to understand those distinctions because the characteristics of different types of shares can significantly affect the way to invest. There are many types of shares which is available such as Equity Share and Preference Share. Equity Share Equity shares are also similarly as ordinary shares. The holders of these shares are the real owners of a company. They have the voting rights in their meetings of board directors. They have a control over the working or operation of a company. Equity shareholders are paid by dividends after paying it to the preference shareholders. The rate of dividend that paid to shareholders are depend on the company’s profit. Shareholders might be get high dividends or maybe not. Normally, these shareholders are taking high risk compared to preference shares. Equity capital are paid after meeting all other claims including that of preference shareholders. Those shareholders take risk in both regarding dividend and return of capital. Equity share capital cannot be claim during life time of the company. Advantages and Disadvantages of Equity Share The first advantage of equity share is this type of share does not have any responsibility to pay a fixed rate of dividend to the shareholders. Furthermore, it can be issued without any charge over of the company’s asset.

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