Are You Confused about Equity Shareholds?
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Advantages of Equity Shares
The other source of return on investment apart from dividend is the capital gains. Gains which arise due to rise in market price of the share.
Liability of shareholder or investor is limited to the extent of the investment made. If the company goes into losses, the share of loss over and above the capital investment would not be borne by the investor.
Stock split means splitting a share into parts. How should an investor be benefited by this? By splitting of share, the per-share price reduces in the market which eventually increases the readability of share. At the end, stock split results in higher volumes with a number of investors leading to high liquidity of the share.
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They are permanent in nature.
Equity shareholders are the actual owners of the company and they bear the highest risk.
Equity shares are transferable, ownership of equity shares can be transferred with or without consideration to other person.
Dividend payable to equity shareholders is an appropriation of profit.
Equity shareholders do not get fixed rate of dividend.