Equity Share Capital

Equity share capital is the portion of a company's total capital that has been raised by issuing ordinary (equity) shares to shareholders — representing the aggregate face value of all equity shares issued and fully paid up by the company. It is recorded on the liabilities side of the balance sheet under shareholders' equity and is distinct from the share premium account (which records the excess over face value collected during share issuances above par). Equity share capital represents the permanent, non-returnable core capital of a company — unlike debt which must be repaid, equity share capital remains with the company unless explicitly reduced through buybacks or capital reduction schemes sanctioned by the NCLT. In India, a company's equity share capital is specified in its Memorandum of Association and can only be changed through formal corporate procedures including board approval, shareholder resolution, and (in certain cases) court approval. Changes in equity share capital occur through: new share issuances (IPOs, FPOs, rights issues, ESOPs, QIPs — increasing share capital), bonus issues (capitalising reserves into equity share capital — increasing shares without cash inflow), and share buybacks (reducing equity share capital). For equity investors analysing Indian companies, monitoring changes in equity share capital over time helps identify dilution (from new issuances) or capital return (from buybacks) that directly affects earnings per share and book value per share — two fundamental metrics used in equity valuation.