OWNERS CAPITAL OR EQUITY CAPITAL

 Owners Capital or Equity Capital
A public limited company may raise funds from promoters or from the investing public by way of owner’s capital or equity capital by issuing ordinary equity shares. Some of the characteristics of Owners/Equity Share Capital are:-

•  It is a source of permanent capital. The holders of such share capital in the company are called equity shareholders or ordinary shareholders. 
•  Equity shareholders are practically owners of the company as they undertake the highest risk.
•  Equity shareholders are entitled to dividends after the income claims of other stakeholders are satisfied. The dividend payable to them is an appropriation of profits and not a charge against profits. 
•  In the event of winding up, ordinary shareholders can exercise their claim on assets after the claims of the other suppliers of capital have been met. 
•  The cost of ordinary shares is usually the highest. This is due to the fact that such shareholders expect a higher rate of return (as their risk is the highest) on their investment as compared to other suppliers of long-term funds. 
•  Ordinary share capital also provides a security to other suppliers of funds. Any institution giving loan to a company would make sure the debt-equity ratio is comfortable to cover the debt. There can be various types of equity shares like New issue, Rights issue, Bonus Shares, Sweat Equity.