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ADVANTAGES OF EQUITY SHARES

Courtesy/By: Sumit Sanjay Ekbote | 2020-04-02 17:40

ADVANTAGES OF EQUITY SHARES

 

  1. No compulsion for dividend:             The equity shareholders are not entitled to any return as dividend unless sufficient profits are available for the purpose & unless the Board of Directors decides to recommend the payment of dividend.

 

  1. No charge on the assets of the company:             With an equity shares base the company can raise funds easily in the future, either by issuing preference shares or debentures, as equity shares have no charge on assets.

 

  1. A very good source of long-term finance:             Equity shares are a very good source of long term finance.  By issuing such shares, a company can have capital permanently as it has been returned except in case of winding up of the company.

 

  1. Equity share avoids the rigidity of fixed payments: Equity provide a company with the requisite flexibility on the disbursement of its income and avoid the rightly of fixed payments.

 

  1. An attraction for persons of limited income: Equity shares are mostly of lower denomination, hence they can be purchased by persons of limited income.

 

  1. Control in competent hands: The rights of various types of equity holders can be adjusted in such a way that the control may be vested in competent hands.

 

  1. Advantages to the investors:
  2. During bumper earrings, equity shareholders may get handsome dividend many times more than the fixed rate of investment.
  3. Equity investors can vote on all the issues of agenda of a general meeting.

Courtesy/By: Sumit Sanjay Ekbote | 2020-04-02 17:40