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NISM Certifications · NISM-Series-X-A: Investment Adviser (Level 1) · Investing in Stocks

In the context of equity share ownership, which of the following is a right that ordinarily belongs to an equity shareholder of a company in India?

Equity shareholders hold a residual claim on the company's assets, meaning they are paid only after creditors, debenture holders and preference shareholders on winding up. Their dividends are discretionary, they rank last in priority, and equity capital is not redeemable.

  1. AA fixed rate of dividend irrespective of company profits
  2. BResidual claim on assets after all creditors and preference shareholders are paid on winding upCorrect
  3. CPriority over debenture holders in repayment of capital
  4. DGuaranteed redemption of shares after a fixed tenure

Explanation

Equity shareholders are the owners of the company and have a residual claim on assets only after all liabilities, debenture holders and preference shareholders are paid. Dividends on equity are not fixed, equity ranks last in priority, and equity shares are not redeemable.

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