Equity share capital refers to those funds which are invested by the public and promoters into the company for a long period of time. Given below are some of the features of equity share capital –
- Those who invest in Equity share capital are known as equity shares holders.
- It is considered to be the most risky investment, but at the same time it has the history of generating superior returns when one compares it with other alternatives of investment
- They have right to vote on all important matters relating to company which ranges from decision on appointment of directors, declaration of dividend, acquisition of new company and so on.
- They are entitled to have profits shared with them in the form of dividend after company has paid out all its expenses like depreciation, interest, administrative expense, selling and distribution expenses etc…, and dividend to preference share holders.
- The liability of equity share capital is limited in the sense that one who holds equity of the company can lose only that amount which he or she has invested and the creditors of the company cannot held the shareholder personally responsible for the debts of the company.
- If the company goes bankrupt than in that event in case of liquidation of assets of the company equity share capital will be paid last after payment is made to creditors and preference share holders.