it’s a very common form of shares and first choice for most of the investors. They have full right over surplus profit on winding up of the company after preference shares and creditors. In the matter of dividend, directors have sole right to decide whether equity share holders receive dividend or not? It’s directors choice. The fortune of the equity shareholders is tied up with the ups and downs of the company that reflect on its share price. Equity share holder earn by buying and selling of that shares. It is also known as the “Risk Capital” because if company fails then holders of these shares may end up with nothing in their hands.
Equity shares are of two kinds. These are–
- Equity Shares with Voting Rights:- the holders of any such equity shares have normal voting rights on every resolution placed before the company at any general meeting, his voting right on a poll shall be in proportion to his shares of the paid up equity capital of the company.
- Equity Shares with Differential Rights:-The holders of any such shares shall have differential rights as to dividend, voting or otherwise in accordance with such rules and subject to such conditions as may be prescribed by the Central Government.