Equity shares are the ordinary shares of a company and are the same instrument that is called common stock in the United States and ordinary shares in the United Kingdom. The main entry describes the rights and risks attached to them. The term equity shares is the standard wording in India, where company law divides share capital into two kinds: equity share capital and preference share capital.
Holders of equity shares are the owners of the company. Each shareholder normally has the right to vote at general meetings, to receive any dividend that is declared, and to share in whatever remains if the company is wound up after all creditors and preference shareholders have been paid. Dividends on equity shares are not fixed and depend on profits and on the decision of the board.
Preference shares, known elsewhere as preferred stock, rank ahead of equity shares for dividends and repayment of capital but usually carry limited voting rights. When Indian market reports refer to trading in the equity segment of a stock exchange, they mean trading in equity shares, as distinct from derivatives or debt. The wider asset class is described under equities.