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2. Types of Equity

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Types of Equity

Many types of shares together form an equity. To be clear, corporate equity is the amount that the company’s shareholders and owners finance for the initial start-up and ongoing operations of the company. Total equity is the residual value remaining in assets after all liabilities have been paid. After that, it is reflected in the company’s balance sheet. Here are the most common types of shares:

  1. Common Stocks

Common stocks, or ordinary stocks, are types of stocks that represent the initial investment in a company. With this share, shareholders get certain rights to the assets of the company. Common shares are counted at par, which means the nominal value of the share. And the total share capital can be determined by multiplying the number of shares outstanding by the par value of the share. To be clear, shareholders have more power over the company and its management.

  1. Preferred Stocks

Preferred stocks or preference shares are issued to investors in a company and offer a fixed dividend. If the company is liquidated, the preferred shareholders will receive the full amount owed to them by the company before the common shareholders. And if dividends were suspended due to a problem with preferred shareholders, they will be paid first when the company is liquidated.

The company can change the characteristics of the preferred shares to make the contracts more attractive to potential investors. It can have, for example, call and exchange reservations. However, these shares do not give rights to the operation or management of the company. Shareholders also do not get voting rights. The only advantage is that they receive dividends regardless of what happens to the company.

  1. Invested Surplus

Invested capital surplus, also known as additional paid-in capital, accumulates the additional amount paid by investors for shares over par value. This account is usually higher than the other accounts and can change as the company has gains and losses from the sale of shares.

  1. Retained Earnings or Profits

This type of equity is retained earnings equity. This account shows the accumulated earnings of the company, and fewer dividends paid to shareholders. Simply put, retained earnings are the portion of a company’s net income that has not been distributed as dividends. It can be used for investments or saved for the future.

  1. Treasury Stocks

Some companies decide to buy back shares from shareholders. If so, the repurchased shares are classified as treasury shares. The company’s equity corresponds to the amounts paid to buy back shares from investors. This equity account usually has a negative balance and is added to the charges as a deduction from the total equity.

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Table of Contents

• Beware of fixed/guaranteed/regular returns/ capital protection schemes. Brokers or their authorized persons or any of their associates are not authorized to offer fixed/guaranteed/regular returns/ capital protection on your investment or authorized to enter into any loan agreement with you to pay interest on the funds offered by you. Please note that in case of default of a member claim for funds or securities given to the broker under any arrangement/ agreement of indicative return will not be accepted by the relevant Committee of the Exchange as per the approved norms.
• Ensure that pay-out of funds/securities is received in your account within 1 working day from the date of pay-out.
• Be careful while executing the PoA (Power of Attorney) – specify all the rights that the stock broker can exercise and timeframe for which PoA is valid. It may be noted that PoA is not a mandatory requirement as per SEBI / Exchanges.
• Register for online applications viz Speed-e and Easiest provided by Depositories for online delivery of securities as an alternative to PoA.

• Do not keep funds idle with the Stock Broker. Please note that your stock broker has to return the credit balance lying with them, within three working days in case you have not done any transaction within last 30 calendar days. Please note that in case of default of a Member, claim for funds and securities, without any transaction on the exchange will not be accepted by the relevant Committee of the Exchange as per the approved norms.

• Check the frequency of accounts settlement opted for. If you have opted for running account, please ensure that your broker settles your account and, in any case, not later than once in 90 days (or 30 days if you have opted for 30 days settlement). In case of declaration of trading member as defaulter, the claims of clients against such defaulter member would be subject to norms for eligibility of claims for compensation from IPF to the clients of the defaulter member. These norms are available on Exchange website at following link: NSE, MCX

• Brokers are not permitted to accept transfer of securities as margin. Securities offered as margin/ collateral MUST remain in the account of the client and can be pledged to the broker only by way of ‘margin pledge’, created in the Depository system. Clients are not permitted to place any securities with the broker or associate of the broker or authorized person of the broker for any reason. Broker can take securities belonging to clients only for settlement of securities sold by the client.

• Always keep your contact details viz. Mobile number/Email ID updated with the stock broker. Email and mobile number is mandatory and you must provide the same to your broker for updation in Exchange records. You must immediately take up the matter with Stock Broker/Exchange if you are not receiving the messages from Exchange/Depositories regularly.

• Don’t ignore any emails/SMSs received from the Exchange for trades done by you. Verify the same with the Contract notes/Statement of accounts received from your broker and report discrepancy, if any, to your broker in writing immediately and if the Stock Broker does not respond, please take this up with the Exchange/Depositories forthwith.

• Check messages sent by Exchanges on a weekly basis regarding funds and securities balances reported by the trading member, compare it with the weekly statement of account sent by broker and immediately raise a concern to the exchange if you notice a discrepancy.

• Please do not transfer funds, for the purposes of trading to anyone, including an authorized person or an associate of the broker, other than a SEBI registered Stock broker.

• Do not deal with unregistered intermediaries (who are not registered with SEBI/Exchanges).

Names and contact details of all Key Managerial Personnel including Compliance Officer

Sr. No.Name of the IndividualDesignationContact NumbersEmail Id
1 Charanpreet GillCEO/
2 Charanpreet GillWhole Time
3 Charanpreet GillCompliance
4Manpriya GillDesignated
5Kewal GillDesignated

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