Definition Of Equity Shares

Equity shares are the main source of long term finance of a joint stock company.

Definition of equity shares. An equity share normally known as ordinary share is a part ownership where each member is a fractional owner and initiates the maximum entrepreneurial liability related to a trading concern. Improve your vocabulary with english vocabulary in use from cambridge. An equity share definition is. Equity typically referred to as shareholders equity or owners equity for privately held companies represents the amount of money that would be returned to a company s shareholders if all of.

Equity shares are the shares joint stock companies issue to the public as the main source of long term financing. The equity of solomon. Debt is the amount of capital that has to be repaid such as a bank loan. The reason it s referred to as long term financing is because equity shares are legally not redeemable in nature.

It gives partial ownership of a public company to a buyer also known as a shareholder who undertakes the entrepreneurial risk associated with a business venture. Want to learn more. A share that gives the person who owns it the right to receive part of a company s profits and to vote at shareholder meetings. It is issued by the company to the general public.

These types of shareholders in any organization possess the right to vote. Features of equity shares capital. Equity on the other hand does not have to be repaid. Equity shares may be issued by a company in different ways but in all cases the actual cash inflow may not arise like bonus issue.

The net proceeds from the issue of equity shares should be credited directly to shareholders funds.