Equity security

Equity securities embody rights in a company or an association. They are held by virtue of their owner’s capacity as a member of the company or association.

These rights may be purely proprietary in nature; they may also, however, confer a right to participation. Depending on the form of the company and the nature of the right, one or other of these aspects will be predominant.

As a rule, equity securities confer an entitlement to a share in the profit generated and in any surplus on liquidation. The equity securities of relevance to the exchange are tradable and negotiable.

Examples of non-tradable equity securities are limited partner’s shares or shares in a private limited company.

See alsoDebt securityShare