Features

The main features of equity shares are:

1. Risk capital. As the equity shareholders are the owners of the company, they have an unlimited interest in the company’s profits. In fact, they provide the risk or venture capital. The value of their holdings increases or decrease with the prosperity or adversity of the company.
2. Fluctuating dividend. The equity shareholders will not get a stable divided from the company. They are eligible to share the profits of the company only after meeting all other obligations of the company. Therefore, the rate of dividend will change year after year. They can share the profits only if anything is left after paying the debenture holders and the preference shareholders. If there is no profits, no dividend will be paid. But, if there is greater profits after paying all fixed charges, the equity shareholders can divide the balance among themselves.
3. Fluctuating market value. The market value of shares changes frequently depending on the profits of the company. If the company makes more profits and pays more dividend, the market price of shares will increase, whereas if the dividend paying capacity of the company decreases, the market value of shares will come down. So, the market value of equity shares does not remain constant.
4. Growth prospects. The equity shares have a very good prospect for capital growth. When a company has an expansion programme within a short period, there will be a sudden increase in the value of shares.
5. Voting right. The equity shareholders have a statutory right to vote in the general meeting of the company.