didderence between preference share and equity share

didderence between preference share and equity share -...

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Difference between Preference share and Equity Share Preference Share Equity Share 1. Preference shares are those shares having preference over equity shares for receiving dividend and capital while winding up of a company. Equity share are ordinary shares which receives dividend and return of capital after PS. 2. PS receives dividends as per fixed rate. ES do not receive dividends at a fixed rate. 3. Preference share holders are not real owners of the company. Equity share holders are the real owners of the company. 4. Preference shares are issued with a clause wherein if company fails to pay the fixed rate of dividend in any particular year due to loss, then the next year it will pay dividend of two years to them. (if cumulative clause if there) No such clause is possible in case of equity shares. 5. Preference share holders do not enjoy any voting
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Unformatted text preview: right. Equity share holders have voting right. 6. Preference share holders don’t get any right to attend board of director meeting. Equity share holders have a right to attend board of director meeting. 7. Preference shares are sources of medium and long term finance. (As per companies Act 1956 not more than 20 years) Equity shares are source of long term finance. 8. Management and control of company do not vest with preference shareholder. Management and control of company vests with equity shareholders. 9. It is relatively less risky in nature. It is relatively more risky in nature. 10. Types of preference share: 1. Convertible 2. Cumulative 3. Participative 4. Redeemable There are no types of equity shares. By: Accounting Friends...
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didderence between preference share and equity share -...

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