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Preference Shares: Presented by Pooja Seervi

Preference shares provide investors with preferential treatment over equity shares in some ways. Preference shareholders have priority to receive fixed dividend payments before equity shareholders, and they also have priority in repayment of capital if the company is liquidated. However, preference shares do not carry voting rights and the returns are fixed rather than based on company performance. There are different types of preference shares depending on whether dividends are cumulative, shares participate in additional profits, and whether shares are convertible or redeemable. Preference shares are suitable for cautious investors seeking steady returns and capital protection.

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Meenakshi Seervi
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97 views

Preference Shares: Presented by Pooja Seervi

Preference shares provide investors with preferential treatment over equity shares in some ways. Preference shareholders have priority to receive fixed dividend payments before equity shareholders, and they also have priority in repayment of capital if the company is liquidated. However, preference shares do not carry voting rights and the returns are fixed rather than based on company performance. There are different types of preference shares depending on whether dividends are cumulative, shares participate in additional profits, and whether shares are convertible or redeemable. Preference shares are suitable for cautious investors seeking steady returns and capital protection.

Uploaded by

Meenakshi Seervi
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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PREFERENCE SHARES

- Presented by Pooja Seervi


Introduction
Companies issue different types of shares to mop-up
funds from various investors .Before Companies Act, 1956
public companies used to issue three types of shares , i.e.
Preferences shares , ordinary shares , and deferred shares .
The companies Act ,1956 has limited the type os shares to only
two i.e. Preference shares and Equity shares .
Definition
As the name suggest , these shares have some preferences as
compared to other types of shares. The holder of Preference
shares have a prior right to receive fixed rate of dividend before
any dividend is paid to equity shares . The preference shares are
purchased by cautious investors who are interested in safety of
investment and who want steady returns on investment .
Features
1) Preference for Dividend
2) Nature of Capital
3) Preference for repayment of capital
4) Risk
5) Nature of Investor
Types of Preference shares
1) Cumulative & Non-cumulative Preferences shares
2) Participating & Non-participating Preferences shares
3) Convertible & Non-convertible Preferences shares
4) Redeemable & Irredeemable Preferences shares
Conclusion
The preference shares are suitable instrument for capital
raising . Since they do not carry any voting rights , there is no
interference by preference shareholders in the operations and
management of the company . Further the convertible option of
the preference share makes it suitable to minimize investment
risks in a venture capital or private equity transaction .

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