Right of equity shareholders.

Equity shareholders are the owners of the company and, as owners, they enjoy certain rights. They are:

1. Right to income. They share the profits of the company after meeting its all other fixed obligations.
2. Right to control. The shareholders have the right to elect the board of directors and thereby get some control over the management of the company.
3. Pre-emptive right. The existing shareholders are given the right to maintain their proportional ownership by purchasing additional equity shares issued by the company. When new issues are made, the existing shareholders are to be given a preferential right to buy the new issue in proportion to their holding. This is known as right shares. These shares are issued to the existing shareholders at a price lower than the price at which it is issued to the public.
4. Rights against ultra vires acts of the company. The equity shareholders are exposed to the risks mentioned in the Memorandum and Articles of Association of the company. Any act done by the company, which is not mentioned in the Memorandum and Articles, are ultra vires. Therefore, the acts of ultra vires are a breach of agreement between the company and the shareholders. The equity shareholders have the right to take legal steps against the company to prevent it from engaging in such actions.
5. Right to have knowledge of corporate affairs. The equity shareholders have the right to know about the affairs of the company at least once a year. The shareholders can present all their grievances at the annual general meeting of the company.
6. Right to transfer shares. The shareholders have the right to transfer equity shares to anyone they like. If dissatisfied, they can convert their shares into cash in the stock market.
7. Miscellaneous rights. The equity shareholders have the right to participate in exceptional profits in proportion to their respective holdings. Moreover, at the time of liquidation of the company, they have a right to get proportionate share in the net assets available for distribution.