Q.Equity shareholders are the ________ of a company.

Equity shares represent the true ownership capital of a company. Equity shareholders receive a variable dividend that depends entirely on the profit the company earns and chooses to distribute, they enjoy voting rights in company meetings, and on winding up they have only a residual claim, being paid after every other claim is settled — making equity the riskiest but potentially most rewarding form of company capital, and one that never has to be repaid during the company's life. Preference shares sit between equity and pure borrowing: preference shareholders receive dividend at a fixed, pre-agreed rate, and this dividend, along with repayment of their capital on winding up, is paid before any amount goes to equity shareholders — but in exchange, preference shareholde …