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## Advantages of Equity Shares * **No fix obligation to pay dividend:** Equity shares do not create any obligation to pay a fixed rate of dividend. * **No need to create any charge:** Equity shares can be issued without creating any charge over the assets of the company. * **Long term capital:** It...

## Advantages of Equity Shares * **No fix obligation to pay dividend:** Equity shares do not create any obligation to pay a fixed rate of dividend. * **No need to create any charge:** Equity shares can be issued without creating any charge over the assets of the company. * **Long term capital:** It is a permanent source of capital and the company has to repay it except under liquidation. * **Ownership:** Equity shareholders are the real owners of the company who have the voting rights. * **Gain in investment:** In case of profits, equity shareholders are the real gainers by way of increased dividends and appreciation in the value of shares. ## Features of Preference Shares Preference shares are the second type of share capital. The two main features are: * **Fixed annual dividend:** * **Return of capital** Although, the preference shareholders do not enjoy most of the rights that equity shareholders enjoy, they do not enjoy nor only on those matters that are related to features of dividend permissible by the company.