Question

TRUE OR FALSE:

Equity shares are issued prior to preference shares and debentures.

Answer 1

This statement is true.

Explanation:

When a company is raising capital, equity shares are usually issued first, as they represent the basic ownership of the company. Once equity capital is in place, a company may issue preference shares and debentures to raise additional funds. Equity shareholders bear the highest risk, so they are prioritized in the issuance process.