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What is Equity Share? Types of Equity Shares

Equity is ownership of assets that may have debt or other liabilities attached to it. Equity is measured for accounting purposes by subtracting liabilities from the value of assets. Equity can apply to a single asset, such as a car or house, or to the entire business. A business that needs to start or expand its operations can sell its equity to raise cash that does not have to be repaid on schedule. In this article we will know what is Equity Share in Share Market and Types of Equity Shares.

What is Equity Share? Types of Equity Shares

What is Equity Share

Equity share, commonly known as ordinary share, is a partial ownership where each member is a partial owner and undertakes maximum entrepreneurial liability belonging to a business concern. Such shareholders in any organization have the right to vote.

Equity share capital remains with the company. It is given back only when the company is closed. Equity shareholders have voting rights and choose the management of the company. The dividend rate on equity capital depends on the availability of additional capital. However, there is no fixed rate of dividend on equity capital.

Types of Equity Shares

1. Sweat Equity Share: This type of share is allotted only to outstanding employees or officers of an organization for the outstanding work of providing Intellectual Property Rights to an organization.

2. Right Share: These are the type of shares that an organization issues to its existing stockholders. This type of share is issued by the company to protect the ownership rights of the old investors.

3. Subscribed Share Capital: It is a part of the issued capital which an investor accepts and agrees to.

4. Authorized Share Capital: This amount is the highest amount that can be issued by an organization. This amount can be changed as per the recommendation of the companies and with the help of some formalities.

5. Issued Share Capital: It is the approved capital that an organization gives to the investors.

6. Paid Up Capital: This is a part of the subscribed capital, which is paid by the investors. Paid-up capital is the money that an organization actually invests in the company’s operations.

7. Bonus Share: When a business divides the stock to its shareholders in the form of dividend, we call it as Bonus Share.

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