Do equity shareholders get dividends?

Yes, but dividends are not guaranteed. They are declared by the company’s board when profits are distributed.

What are Equity Shares? - The Finxperts Academy

Q: What are equity shares?

Equity shares are ownership units of a company that give shareholders rights like voting, dividends, and capital growth in India’s stock market.

Q: What are the features of equity shares?

Key features include ownership rights, voting power, dividend eligibility, transferability, and variable risk/return.

Q: What are the types of equity shares?

Types include ordinary shares, rights issue, bonus shares, sweat equity shares, and IPO equity shares.

Q: What are the advantages of equity shares?

Advantages include high return potential, dividend income, ownership rights, liquidity, and inflation hedge.

Q: What are the disadvantages of equity shares?

Disadvantages include high risk, uncertain dividends, dilution of ownership, and dependence on company performance.

Q: How are equity shares different from preference shares?

Equity shares offer voting rights and variable dividends, while preference shares provide fixed dividends and priority in payout but no voting rights.

Q: How are equity shares issued in India?

Equity shares are issued via IPOs, FPOs, rights issues, and bonus issues under SEBI regulations.

Q: Can beginners invest in equity shares?

Yes, equity shares are beginner-friendly investments, provided investors understand risks and practice proper risk management.

Q: Are equity shares risky?

Yes, equity shares are volatile and risky, but they also offer high long-term wealth creation potential compared to fixed income instruments.

What are Equity Shares? | 2025 Complete Beginner’s Guide

What are equity shares is a common query for new investors entering India’s stock market. Equity shares represent ownership in a company and come with rights like voting, dividends, and capital growth. This 2025 guide by The Finxperts Academy explains their meaning, features, types, and pros & cons for beginners.

Understanding Equity Shares in Simple Terms

If you’ve ever bought a company’s share on NSE or BSE, you’ve purchased equity shares. These shares make you a part-owner of the company, not just a trader in its stock.

Equity shareholders enjoy:

Voting power in company decisions.
Dividend eligibility if declared.
Wealth creation through rising stock prices.

This makes equity shares one of the most popular ways to invest in India.

Features of Equity Shares

When we ask what are equity shares, we also need to look at their main characteristics:

Ownership Rights: Every equity holder is a co-owner.
Voting Rights: Ability to vote in shareholder meetings.
Variable Returns: Dividends are not fixed; profits depend on performance.
Liquidity: Shares can be easily traded on NSE/BSE.
Risk Factor: Returns are high but so is the risk.

Types of Equity Shares in India

Ordinary Equity Shares – The most basic form with voting rights.
Rights Issue Shares – Offered to existing shareholders, usually at a discount.
Bonus Shares – Free shares given out of company reserves.
Sweat Equity Shares – Issued to employees or directors for services.
IPO Shares – Equity shares offered to the public for the first time.

👉 Example: Companies like Infosys and Reliance frequently reward investors with bonus shares.

Advantages of Equity Shares

Potential for High Returns in long term.
Voting Rights to influence decisions.
Dividend Income if declared.
Easily Tradable in secondary markets.
Helps Beat Inflation over time.

Disadvantages of Equity Shares

Market Risk: Prices fluctuate daily.
Uncertain Dividends: No fixed income.
Ownership Dilution: Happens when new shares are issued.
Dependence on Company Performance.

Equity Shares vs Preference Shares

Feature	Equity Shares	Preference Shares
Voting Rights	Yes	Usually No
Dividend	Variable	Fixed priority
Risk	Higher	Lower
Ownership	Yes	Yes, limited
Return	Capital gains + dividends	Fixed dividends only

How Are Equity Shares Issued in India?

Companies issue equity shares mainly through:

IPO (Initial Public Offer): To raise capital by listing on NSE.
FPO (Follow-on Public Offer): Additional shares post listing.
Rights & Bonus Issues: For existing shareholders.

All issuances are regulated by SEBI.

To participate, investors need a Demat account.

Example of Equity Shares in India

Reliance Industries Ltd: One of India’s largest listed equity shares.
Infosys Ltd: Regularly issues bonus equity shares.
Zomato Ltd: Equity shares offered via IPO became a household name.

These examples show how equity shares in India create wealth opportunities.

Why Beginners Must Learn Equity Shares

For new investors, equity shares are:

A stepping stone into stock market investing.
A way to participate in IPOs.
A long-term tool for wealth generation.
An entry point into financial literacy.

👉 At The Finxperts Academy, we simplify equity share concepts and guide students through structured stock market training. Our offline and online courses cover equity fundamentals, NISM prep, and practical trading setups.

FAQs

Q1: What are equity shares?
A: They are ownership shares in a company listed on NSE/BSE.

Q2: What are the features of equity shares?
A: Ownership, voting rights, variable dividends, liquidity, and market risk.

Q3: What are the types of equity shares?
A: Ordinary, bonus, rights issue, sweat equity, and IPO shares.

Q4: What are the advantages of equity shares?
A: High return potential, liquidity, and ownership benefits.

Q5: What are the disadvantages of equity shares?
A: High volatility, uncertain dividends, and dilution.

Q6: How are equity shares different from preference shares?
A: Equity = voting rights + variable dividends; Preference = fixed dividends, no voting rights.

Q7: How are equity shares issued in India?
A: Through IPOs, FPOs, and rights/bonus issues under SEBI rules.

Q8: Can beginners invest in equity shares?
A: Yes, but they must understand risks and long-term perspective.

Q9: Do equity shareholders always get dividends?
A: No, dividends are declared only if the company makes profits.

Q10: Are equity shares risky?
A: Yes, but with risk comes the potential for higher returns.

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The Finxperts Academy
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Website: www.thefinxpertsacademy.com
Email: thefinxpertsacademy@gmail.com
Phone: +91 9717333285

Disclaimer

This blog is for educational purposes only. Stock market investments are subject to risks. Please do thorough research before investing.