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    Preference Shares

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    Rishab Mehta
    Preference shares are given preference over equity shares in terms of dividend payments and repayment of capital in the event of a company winding up. Preference shareholders receive their fixed dividend before equity shareholders and have their capital returned to them ahead of equity holders if a company is liquidated. While preference shareholders cannot participate in company management, they can vote on matters affecting their interests.

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    Preference Shares

    Uploaded by

    Rishab Mehta
    135 views1 page
    Preference shares are given preference over equity shares in terms of dividend payments and repayment of capital in the event of a company winding up. Preference shareholders receive their fixed dividend before equity shareholders and have their capital returned to them ahead of equity holders if a company is liquidated. While preference shareholders cannot participate in company management, they can vote on matters affecting their interests.

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    Preference shares are given preference over equity shares in terms of dividend payments and repayment of capital in the event of a company winding up. Preference shareholders receive their fixed dividend before equity shareholders and have their capital returned to them ahead of equity holders if a company is liquidated. While preference shareholders cannot participate in company management, they can vote on matters affecting their interests.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as DOC, PDF, TXT or read online from Scribd
    Download as doc, pdf, or txt
    135 views1 page

    Preference Shares

    Uploaded by

    Rishab Mehta
    Preference shares are given preference over equity shares in terms of dividend payments and repayment of capital in the event of a company winding up. Preference shareholders receive their fixed dividend before equity shareholders and have their capital returned to them ahead of equity holders if a company is liquidated. While preference shareholders cannot participate in company management, they can vote on matters affecting their interests.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as DOC, PDF, TXT or read online from Scribd
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    Preference shares; Features of preference shares

    Meaning: Preference shares are those shares which are given preference as regards to
    payment of dividend and repayment of capital. Preference shareholders are given preference
    over equity shareholders as in the case of winding up of the company, their capital is paid
    back first and then the equity shareholders are paid. Preference shareholders cannot exercise
    their voting rights on all the matters. They can vote only on the matters affecting their own
    interest.

    Features of Preference Shares:

    • Return on investment: Preference shares are given preference to get a return on


    investment i.e. dividend. they are paid dividend first out of the profits made by a
    company.

    • Return of capital: These shareholders are paid their capital first in case of winding
    up of the company.

    • Fixed dividend:Preference shares have a fixed rate of dividend and that is the reason
    they are called fixed income securities. Whether the company has low or high profits,
    they are entitled only to a fixed rate of dividend.

    • Non-participation in prosperity: On account of fixed dividends, these shares do not


    have any change to share in the prosperity of the company's business. (except in case
    of participating preference shares.)

    • Non-participation in management: Preference shareholders do not participate in the


    management of the company's affairs.

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