Question

Give two merits and two limitations of equity shares, from the point of view of the management.

Answer 1

Answer:

Equity shares are the main source of income for companies that give investors the right to vote and share profits.

Merits:

1. There is claim over income and asset.

2. There is no obligation to repay the money acquired through it.

Demerits:

1. Equity shares give people the right to share the company’s profits with existing owners.

2. There is limited control.