Equity Security (Corporate Law) Law and Legal Definition

Equity security is a stock that represents ownership of a firm. Generally, equity securities provide steady income as dividends. However, they can fluctuate in their market value with the ups and downs of the economic cycle and the fortunes of the issuing firm.

The following is the definition given for equity security by the state of California.

“Equity security means any share or membership of a domestic or foreign corporation; any partnership interest, membership interest, or equivalent equity interest in an other business entity; and any security convertible with or without consideration into, or any warrant or right to subscribe to or purchase any of the foregoing”. [Cal Corp Code § 168]