Question
“Equity shareholders are the risk bearing shareholders.” — Explain.

Answer

Equity shareholders are connected with the company from its incorporation to its dissolution. As the owners of the company, they have right to remain present in the general meeting and they have also the voting right. They receive the profit of the company jn the form of dividend. If the company suffers loss, they do not get dividend which means that they havéto suffer loss. In case of liquidation of the company, the equity shareholders get the money bai± afterhe payment is made to all lenders. Equity shareholders get the money back after the money is refunded to preference shareholders. As they undertake the risk they are considered to be the true owners.

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