Question

Why is equity share capital called risk capital?

Answer 1

This is because equity shareholders have a claim over the residual proceeds of the company.In the event of winding up they are the last to be paid off after settling the claims of creditors and other external liabilities.In case the funds are insufficient  to settle external liabilities,equity shareholders are not paid off anything instead the uncalled amount may be called up from them.

Answer 2

Answer:

hey mate ✌️

this is because equity shares have risk of fluctuating market values of shares.in times of adversity this may be low return or even or return.there are too many procedural delay and too many time consuming formalities to be completed before any public issues of share can be made