An equity share, also known as an ordinary share, is a type of share that represents ownership in a corporation. Equity shares represent a claim on the corporation's assets and earnings. They give the holder a certain degree of control over the corporation. Equity shares are typically issued in return for cash, but they may be issued in return for other assets, such as property or another company's shares. 

There are two main types of equity shares: common shares and preferred shares. Common shares give the holder the right to vote at shareholders' meetings and to receive dividends. Preferred shares give the holder the right to receive dividends but not the right to vote. 

Read: CBSE 12th Commerce 

Equity shares may be issued with different voting rights, which can give the holder more or less control over the corporation. Equity shares may also be issued with different dividend rights, which can give the holder the right to receive a higher or lower percentage of the corporation's profits.                                 

Important Things To Know About Equity Shares   

• Equity shares are the most common form of share capital. 
•  Equity shares represent ownership in a company. 
•  Equity shares entitle the holder to a share of the company's profits (called dividends). 
•  Equity shares may have voting rights, which entitle the holder to participate in the company's decision-making process. 
•  Equity shares may be traded on a stock exchange. 
•  Equity shares may be issued by private companies, public companies, or mutual companies. 

Strategies Regarding Equity Shares 

•  Equity shares represent ownership in a company, and shareholders are entitled to a portion of the company's profits or losses. 
• Equity shares may be voting or non-voting. Voting shares give shareholders the right to vote on company matters, while non-voting shares do not. 
• Equity shares may be issued for cash or other considerations, such as property or services. 
•  Equity shares may be issued at par, at a premium, or at a discount. 
•  Equity shares may be redeemable or non-redeemable. Redeemable shares can be bought back by the company at a later date, while non-redeemable shares cannot. 
•  Equity shares may be cumulative or non-cumulative. Cumulative shares entitle shareholders to receive any missed dividends before non-cumulative shareholders. 
•  Equity shares may be preference shares or common shares. Preference shareholders have preference over common shareholders in the event of liquidation but do not have voting rights. 
•  Equity shares may be primary or secondary. Primary shares are newly issued shares, while secondary shares are existing shares that are being sold by shareholders. 
•  Equity shares may be listed or unlisted. Listed shares are traded on a stock exchange, while unlisted shares are not. 
•  Equity shares may be the bearer or registered. Bearer shares are anonymous and can be transferred without the need for a formal transfer process, while registered shares are not anonymous and require a formal transfer process. 
•  Equity shares may be voting or non-voting. Voting shares give shareholders the right to vote on company matters, while non-voting shares do not. 
•  Equity shares may be convertible or non-convertible. Convertible shares can be converted into another type of security, such as a bond, at a later date, while non-convertible shares cannot. 
•  Equity shares may be callable or non-callable. Callable shares can be bought back by the company at a later date, while non-callable shares cannot. 
•  Equity shares may be traded in the primary or secondary market. The primary market is the market for new shares, while the secondary market is the market for existing shares. 
•  Equity shares may be bought or sold in the open market or through a private transaction. 

Also Read:- The benefits of an Income share agreement program.

Books for Equity Shares 

1. "The Intelligent Investor" by Benjamin Graham  

One of the most influential books ever written on investing, "The Intelligent Investor" distills Graham's philosophy into one complete volume. A must-read for anyone considering buying stocks, bonds, or mutual funds. 

2. "One Up On Wall Street" by Peter Lynch,  

Written for the average investor, this book provides valuable insights about what to look for when buying stocks. Lynch breaks down investing into simple terms that anyone can understand. 

3. "The Little Book of Common Sense Investing: The Only Way to Guarantee Your Fair Share of Stock Market Returns" by John C. Bogle 

John Bogle is the founder of Vanguard, one of the largest investment management companies in the world. Bogle lays out a simple yet effective investment strategy for long-term success in this book. 

4. "Beating the Street" by Peter Lynch 

Another great book from Peter Lynch, "Beating the Street," provides a more in-depth analysis of how to pick individual stocks. A must-read for any investor who is considering buying stocks on their own. 

5. "A Random Walk Down Wall Street" by Burton G. Malkiel 

A modern classic, "A Random Walk Down Wall Street," provides a detailed look at the stock market and how it works. Malkiel's writing is clear and concise, making this an excellent book for anyone who wants to understand the stock market.                                          

 Frequently Asked Questions 

Q1. What is the difference between equity shares and preference shares? 

Ans:- Preference shares are a type of equity share that entitles the holder to a preferential claim on the company's assets in the event of liquidation. Equity shares do not have this preferential claim. 

Q2. What are the benefits of holding equity shares? 

Ans:- Equity shareholders are typically entitled to voting rights, which allow them to participate in the company's governance. Equity shareholders may also receive dividends, which are payments from the company's profits. 

Q3. What are the risks of holding equity shares? 

Ans:- Equity shareholders are typically subject to more significant risks than preference shareholders. For example, equity shareholders may receive fewer dividends in times of financial distress and lose their entire investment if the company is liquidated. 

Q4. What is the difference between equity shares and debt? 

Ans:- Debt is a type of financial instrument that requires the borrower to repay the lender with interest. Equity is a type of ownership stake in a company. Debtors have no ownership stake in the company and are not entitled to voting rights.