Equity shares are the standard type of share issued by a company, carrying voting rights and a residual claim on profits (via dividends, if declared). This is what most retail investors mean when they say “buying a stock.” SEBI’s investor education portal covers shareholder rights, including voting and liquidation priority, in more depth.
Equity Shares vs Preference Shares
Some companies also issue preference shares, which typically get priority for dividend payments but usually don’t carry voting rights. Preference shares are far less common for retail investors than equity shares.
Related Reading
See the full equity vs preference comparison table in What Are Stocks? Ownership, Price, and Value Explained.
Example
A company issues 1,000 equity shares in total. An investor who buys 10 of them owns 1% of the company, is entitled to 1% of any dividend declared, and can cast 10 votes at the AGM — one vote per share — on matters like appointing directors or approving a merger.
Frequently Asked Questions
Do all equity shares carry equal voting rights?
Ordinary equity shares typically carry one vote per share. Some companies also issue Differential Voting Right (DVR) shares with unequal voting power, but these are a distinct, far less common share class.
What happens to equity shareholders if a company is liquidated?
They're paid only after all creditors, bondholders, and preference shareholders have been settled — equity holders carry the highest risk in a liquidation and receive any residual value last.
Is "buying a stock" the same as buying equity shares?
Yes, in everyday usage "buying a stock" almost always refers to buying equity shares, since they're the default and by far the most commonly traded class of company shares.