Equity shares

Also referred to as ordinary shares or (in the USA) common stock. Equity shares represent the right to participate in the residual assets of a business and typically have voting rights. Equity shareholders will usually receive a dividend, the level of which depends on the level of achieved profits and the extent to which the directors wish to reinvest profits back into the business. If the business is wound up, equity shareholders will be entitled to any assets left over after all other investors have been paid off. Equity shareholders have limited liability, which means that their liability to contribute money to the business is limited to the amount they have already invested.

 

reference: Business Studies / Accounting. Accounts & Finance Glossary. Jim Riley BA(Hons) MBA FCA // tutor2u

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