Question

Reduction of controlling power of existing equity shareholders in a company is a result of.

• A. Issue of new equity shares
• B. Issue of new preference shares
• C. Issue of new debentures
• D. Issue of new bonds

Hint:

The issuance of new equity shares is a common way to raise capital, but it also results in dilution of existing shareholders' control over the company.

Answer 1

The Correct Option is A

When a company issues new equity shares, it dilutes the ownership percentage of existing equity shareholders. This reduces their controlling power in the company because their proportionate ownership decreases.