What does equity share capital mean?

By Research Desk
about 5 years ago

Equity share capital represents the money contributed by owners and investors towards the capital of the company. Equity share capital is also known as ‘share capital’, or simply ‘equity’.

The number of equity shares multiplied by the face value of each equity share gives us the equity share capital of the company.

For example, as of 30th September 2014, share capital of Berger Paints only consists of equity shares (i.e. no preference shares).

No. of Shares Outstanding = 34,66,41,226 i.e. 34.66 crore

Face Value of each Equity Share (FV) = Rs. 2 each

Equity Share Capital of Berger Paints = No. of shares outstanding * FV

= 34.66 crore * Rs 2

= Rs. 69.33 crore

It must be noted that the share price of a company keeps changing once it is listed on a stock exchange, but the equity share capital stated on its balance sheet changes only rarely, when corporate actions like rights issue, bonus issue, merger etc. take place.

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