What is Ordinary Shares

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An equity interest in a company may be said to represent a share of company assets and a share of any profit earned on those assets after other claims have been met.

Equity shareholders are owners of business they purchase shares commonly called ordinary shares.

Money is used by company to buy assets which are used to earn profit and belong to the ordinary shareholders. Equity share entail no agreement on common part to return to shareholder the amount of their investment. Directors are under obligation to maintain assets intact (not allow them to drop in value). Whether the original investment in business keeps its value depends on how well the company is managed and how finance is put. Equity interest therefore represents a stake in asset of business which shareholders cannot ask company to repay plus an income stake that is a share in company profit. If an equity shareholder wishes to regain money invested he must either find a buyer of his share or force the company into liquidation.

The ease in which he will find the buyer of share depends on the money he is asking or the marketability of particular company shares. Shares of company quoted on a stock exchange are more marketable than those that are not.

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