Reduction of controlling power of existing equity shareholders in a company is a result of:
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) - Issue of new equity shares.
The reduction of controlling power of existing equity shareholders in a company is a result of Issue of new equity shares.
When a company issues new equity shares, it dilutes the ownership stake of existing equity shareholders. As more shares are issued, each existing shareholder's ownership percentage in the company decreases, leading to a reduction in controlling power.