equity share capital is a prerequisite to the creation of a copany.explain
Equity share capital is a permanent source of funds for the business. In other words, funds raised from the issue of equity shares remain invested in the business till the time of winding-up of the company. It provides a kind of financial cushion to the creditors as they receive their claims before the equity shareholders. In addition to this, equity share capital represents owner's funds. Moreover, it is used for starting up the operations of the company. Thus, it is considered as a pre-requisite for the creation of a company.