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164 Corporate Finance BRILLIANT’S

shareholders is different from the owners in case `m g§`wŠV \$åg© H$s pñW{V`m| _| ñdm_r go AcJ hmoVr h¡
of sole proprietary business or partnership {OgH$m Agr{_V Xm{`Ëd hmoVm h¡Ÿ& BZ \$åg© Ho$ g_mnZ H$s
firms where they have unlimited liability. In the
pñW{V _| F$UXmVmAm| Ho$ Xmdm| H$m ^wJVmZ H$aZo Ho$ {cE
event of the insolvency of these firms, owners
are required to bring in additional capital from ñdm{_`m| H$mo CZH$s {ZOr g§n{Îm go A{V[aŠV ny§Or OwQ>mZr
their personal savings to pay claims of creditors. n‹S>Vr h¢Ÿ& gm_mÝ` eo`a Ho$ gr{_V Xm{`Ëd H$s `h {deofVm,
The limited liability feature of ordinary share A{ZÀNw>H$ {ZdoeH$Vm©Am| H$mo CZH$m \§$S> H§$nZr _| {Zdoe
encourages otherwise unwilling investors to
H$aZo Ho$ {cE àmoËgm{hV H$aVr h¡Ÿ& Bg àH$ma `h H§$nZr H$mo
invest their funds in the company. Thus, it helps
companies to raise funds. \§$S²>g OwQ>mZo _| ghm`Vm H$aVr h¡Ÿ&
6. Pre-emptive rights: Equity sharehold- 6. àr-Eoån{Q>d (nydm©H«$`) A{YH$ma… g_Vm
ers have been given right to purchase addi- A§eYm[a`m| H$mo BpŠdQ>r eo`g© Ho$ A{V[aŠV Bew IarXZo H$m
tional issues of equity shares. The company is A{YH$ma hmoVm h¡Ÿ& EH$ H$ånZr ZE Bí`yO H$mo npãcH$
under legal compulsion to offer new issues to
the existing equity stockholders before placing gãg{H«$ßeZ Ho$ {cE _mH}$Q> _| cmZo go nyd© dV©_mZ Bp³dQ>r
them in the market for public subscription. eo¶ahmoëS>g© H$mo àñVwV H$aZo Ho$ {cE H$mZyZZ ~mÜ` h¡Ÿ&
Such right is known as pre-emptive right. Eogo A{YH$ma H$mo àr-Eoån{Q>d A{YH$ma H$hVo h¢Ÿ&
7. Primary risk bearer: The holders of 7. àmW[_H$ Omo{I_H$Vm©… Bp³dQ>r eo¶ahmoëS>g©,
equity shares are the primary risk bearer. It is àmW{_H$ Omo{I_H$Vm© hmoVo h¢Ÿ& BgH$m AW© `h h¡ {H$ `{X
the issue of equity shares that mainly provides
H$ånZr H$mo ZwH$gmZ hmo Am¡a Bgo ~§X H$aZm n‹S>o Vmo Bp³dQ>r
risk capital. This implies that in case the
company suffers losses and has to be closed eo¶ahmoëS>g© CZHo$ Ûmam BÝdoñQ> H$s JB© nyar YZam{e Jdm±
down, the equity shareholders may lose the XoVo h¢Ÿ&
entire amount they had invested.
8. Enjoy high profits: Equity shareholders 8. A{YH$ àm°{\$Q> H$m cm^… g_Vm A§eYmar A{YH$
are likely to enjoy a higher profit as well as àm°{\$Q> Ho$ gmW-gmW eo`g© H$s d¡ë`y _| d¥{Õ H$m ^r cm^
higher increase in the value of the shares. CR>mVo h¢Ÿ&
9. Base for raising loans: Equity share 9. cmoÝg àmßV H$aZo H$m A{YH$ma… g_Vm A§e ny§Or
capital is the basis on which loans can be raised. dh AmYma h¡ {Og na cmoZ àmßV {H$`m OmVm h¡Ÿ& `h
It provides credibility to the company and H$ånZr H$s gmI ~‹T>mVm h¡ Am¡a cmoZ XoZo dmco H$mo {dídmg
confidence to the loan providers. àXmZ H$aVm h¡Ÿ&
10. Non-Redeemable: Equity share capi- 10. Zm°Z-B[a{S>_o{~{cQ>r… BpŠdQ>r eo`a H¡${nQ>c,
tal is a source of long term finance or perma- XrK©H$mcrZ \$m`Z|g `m H§$nZr H$s pñWa nyy§Or H$m òmoV h¡
nent capital of the company and company is Am¡a Bg{cE H§$nZr BgHo$ OrdZ H$mc Ho$ Xm¡amZ Bgo [a{S>_
not under obligation to redeem or pay it back
during the life time of company. However, a H$aZo `m BgH$m nwZ^w©JVmZ H$aZo Ho$ {cE ~mÜ` Zht h¡Ÿ&
company may buy back its own shares by hmcm§{H$ A~ EH$ H$ånZr {ZYm©[aV à{H«$`m H$m nmcZ H$a
following the prescribed proce-dure. CgHo$ A§e nwZ… àmßV H$a gH$Vr h¡Ÿ&
11. Real owner: Equity shareholders are 11. dmñV{dH$ ñdm_r… Bp³dQ>r eo¶ahmoëS>g©, H$ånZr
real owners of company and have control over Ho$ dmñV{dH$ _m{cH$ hmoVo h¢ Am¡a CÝh| H§$nZr Ho$ à~§YZ
management and working of company. Am¡a H$m`©{d{Y na {Z`§ÌU H$aZm hmoVm h¡Ÿ&