Equity interest definition
/What is an Equity Interest?
Equity interest is the ownership share of a shareholder in a business. For example, having a 15% equity interest in a company means that a shareholder owns 15% of the business. An equity interest does not necessarily mean that a shareholder is entitled to a proportionate share of the income generated by an investee. Only if a business generates positive cash flow can it issue dividends to its shareholders. However, if the business is eventually sold off or liquidated , the shareholder will be paid his proportionate share of any residual interest remaining after all creditor claims have been settled.
An equity interest of 51% or more gives a shareholder voting control over an investee; otherwise, the shareholder is considered to have a minority interest . When a shareholder has a majority equity interest in a business, he or she can control its board of directors, and so can also replace its chief executive officer.
