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.