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Equity Shares

The equity shares represent part ownership in the company. In investing, the term represents ownership in a company to the extent of shares holding by an entity. When a company wants to raise money there are variety of options available through which it can raise capital for its required purpose (expanding business, purchase capital asset etc.) The equity shares are one of them which is considered long term financing option for a company. A company issues shares when it wishes to raise money through an IPO. The holders of the equity shares have various rights and can vote on various matters of the company.

Features of Equity Shares

The equity shareholders have right to vote on various matters of the company.

They also have claim on the surplus of the company in the form of dividends.

The Equity Shares are transferable in nature and are trade in the secondary market.

The Equity shares are the permanent source of capital for the company.

These are the common features related to the equity shares of a company. There are several advantages associated with investing in equity shares. Like, they provide capital appreciation and generate wealth for investors. This asset class also plays a significant role in asset diversification of investor portfolios. To conclude, the equity shares comes with the growth prospects along with risks associated with price fluctuation. One needs to invests directly in equity shares of a company only if they truly understand the financials of the business and many other variants along with risk analysis factors that require careful perusal & analysis.