Explain equity share in details?

The capital obtained by issue of equity shares is known as equity share capital. It is the important source of obtaining the long term finance. Equity shareholders are the owners of the company. The rate of dividend is paid after meeting all other claims. They have a right to vote and participate in the management of the company. They enjoy the reward as well as bear the risk.

• Merits :

1. Equity share capital doesn’t create any charge on the assets of the company.
2. Voting rights of equity shareholders assure democratic control over management of the company.
3. Equity share capital is to be repaid only at the
   time of winding up of a company and hence it is permanent capital of the business.
4. There is no burden on the company in respect of dividend payable to equity shareholders because it is not compulsory to pay dividend.
5. Equity shares are generally suitable for those investors who are willing to undertake risk for higher returns.
6. Equity share capital increases credit worthiness of the company and also provides confidence to prospective loan providers.