In the Companies Act 2006, a company's issued share capital excluding any part of that capital that, neither as respects dividends nor as respects capital, carries any right to participate beyond a specified amount in a distribution (section 548, Companies Act 2006).

Ordinary shares generally constitute equity share capital but fixed dividend preference shares would not usually form part of equity share capital, unless they carry an uncapped right to participate in a winding up of the company or if they also have a right to a participating dividend.

When considering this term in the context of financial services, reference should be made to the FCA Handbook glossary definition of equity share capital.

For more information on equity share capital and the implications of shares forming part of a company's equity share capital, see Practice note, Preference shares: Equity share capital.