Equity shares are the main source of finance for a company. They are issued to the public and shareholders do not have preferential rights to repayment or dividends. Shareholders own the company collectively and enjoy residual income but also control over company affairs. Equity shares are a permanent capital source, shareholders bear the highest risk as owners, and shares can be transferred. Dividends are paid from company profits but there is no obligation to pay. Equity provides permanent capital with no repayment liability and increases creditworthiness, but it has the highest cost and dividends are not tax deductible with high floatation expenses.

1. EQUITY SHARES
ANSHUL TAYADE

2. MEANING
• Equity shares are the main source of finance of a firm.
• It is issued to the general public.
• Equity shareholders do not enjoy any preferential rights with
regard to repayment of capital and dividend.
• They are entitled to residual income of the company, but they
enjoy the right to control the affairs of the business and all
the shareholders collectively are the owners of the company.

3. FEATURES
The main features of equity shares are:-
1. They are permanent in nature.
2. Equity shareholder are the actual owners of the company and
the company and they bear the highest risk.
3. Equity shareholders are transferable, i.e. ownership of equity
shares can be transferred with or without consideration to other
person.
4. Dividend payable to equity shareholders is an appropriation in
profit.

4. MERITS
Advantages from Company's point of view
1. They are a permanent source of capital and as such; do
not involve any repayment liability.
2. They do not have any obligation regarding payment of
dividend.
3. Larger equity capital base increases the creditworthiness
of the company among the creditors and investors.

5. DEMERITS
Disadvantages from Company's point of view
1. Cost of equity is the highest among all the sources of
finance.
2. Payment of dividend on equity shares is not tax-
deductible expenditure.
3. As compared to other sources of finance, issue of equity
shares involve higher floatation expenses of brokerage,
underwriting commission, etc.

6. Thank you