{"id":104928,"date":"2021-01-30T14:41:30","date_gmt":"2021-01-30T09:11:30","guid":{"rendered":"https:\/\/www.vskills.in\/certification\/tutorial\/?page_id=104928"},"modified":"2024-04-12T14:28:18","modified_gmt":"2024-04-12T08:58:18","slug":"disadvantages-of-equity-share","status":"publish","type":"page","link":"https:\/\/www.vskills.in\/certification\/tutorial\/disadvantages-of-equity-share\/","title":{"rendered":"Disadvantages of Equity Share"},"content":{"rendered":"\n<ul class=\"wp-block-list\"><li>More Equity Share Capital issued means less utilization of trading on equity<\/li><li>As equity capital cannot be redeemed, there is danger of over capitalization<\/li><li>Investors desirous of investing in safe securities with fixed income do not go for equity shares<\/li><\/ul>\n\n\n\n<p>Disadvantages from the Shareholders\u2019 Point of View:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Equity shareholders get dividend only if there remains any profit after paying debenture interest, tax and preference dividend. Thus, getting dividend on equity shares is uncertain every year.<\/li><li>Equity shareholders are scattered and unorganized, and hence they are unable to exercise any effective control over the affairs of the company.<\/li><li>Equity shareholders bear the highest degree of risk of the company.<\/li><li>Market price of equity shares fluctuate very widely which, in most occasions, erode the value of investment.<\/li><li>Issue of fresh shares reduces the earnings of existing shareholders.<\/li><\/ul>\n\n\n\n<p>Disadvantage from the Company\u2019s Point of View:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Cost of equity is the highest among all the sources of finance.<\/li><li>Payment of dividend on equity shares is not tax deductible expenditure.<\/li><li>As compared to other sources of finance, issue of equity shares involves higher floatation expenses of brokerage, underwriting commission, etc.<\/li><\/ul>\n","protected":false},"excerpt":{"rendered":"<p>More Equity Share Capital issued means less utilization of trading on equity As equity capital cannot be redeemed, there is danger of over capitalization Investors desirous of investing in safe securities with fixed income do not go for equity shares Disadvantages from the Shareholders\u2019 Point of View: Equity shareholders get dividend only if there remains&#8230;<\/p>\n","protected":false},"author":1,"featured_media":0,"parent":0,"menu_order":0,"comment_status":"closed","ping_status":"closed","template":"","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-104928","page","type-page","status-publish","hentry"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v24.5 - 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