Q.What is an Equity share ?

An equity share (ordinary share) is a share that is not a preference share. Equity shareholders are the real owners of the company: they have no fixed dividend, are paid dividend and capital only after preference shareholders, bear the greatest risk, and enjoy voting rights and control.

This concept is from the company-accounts chapter of the AP Inter 2nd-year (Class 12) Accountancy syllabus, which aligns with the NCERT/CBSE commerce curriculum.

Share capital of a company is divided into two classes: preference shares and equity shares. An equity share is any share that is not a preference share. Equity shareholders do not get a fixed rate of dividend; they receive dividend out of the remaining profits only after the preference dividend has been paid, and the rate can vary from year to year. At the time of winding up, their capital is repaid last, after all outside liabilities and preference capital. In return for beari …