The term "equity" refers to one of the two major categories of financing a business, the other being debt. In general, equity is analogized to ownership in the corporation and debt is thought of as borrowings of the corporation. However, there is no bright-line distinction between debt and equity, but equity has a number of features that tend to differ from debt.
First, equtiy claims are subordinated to debt claims, meaning that debt claims are paid before equity claims receive anything. Another way of saying this is that equity ranks below debt. For this reason equity, and especially the equity that ranks the lowest--common stock--is often referred to as the "residual claim" on the corporation's assets.
Second, equity typically offers a variable return that depends on the company's performance, rather than the fixed return of debt. The holders of equity look to dividends and capital appreciation for their return, compared to the holders of debt who look to interest.
Third, equity tends to have no specific maturity date, and generally does not need to be "repaid." Debt, in contrast, does have a specific maturity date on which the principal must be paid.
Fourth, the holder of equity generally would not have the ability to force the company into bankruptcy if equity claims are not paid. This is true even if the equity claims were expressed as a fixed percentage, such as dividends on preferred stock.