Justify the following statement : Equity shareholders are real owners and controllers of company.

Answer: The statement is correct, because equity shareholders bear the ultimate risk of the company and have full voting rights.

• Equity share capital is the owned and permanent capital of the company; it is risk capital.
• Equity shareholders have voting rights on all resolutions at general meetings, one vote per share.
• They elect the Board of Directors and appoint auditors, and so control the policies and management of the company.
• They are entitled to the entire residual profit after paying preference dividend, and to the surplus assets on winding up after all others are paid.
• They bear the greatest risk: no fixed dividend, and they are paid last on winding up.
• Because they carry the risk, enjoy the residual rewards and exercise control through votes, equity shareholders are called the real owners and controllers (real masters) of the company.