Types of Preference Shares

Preference share can be defined as those shares that carry preferential right with regard to dividend as well as repayment of capital in case of winding up of the company. There are many types of preference shares which company can issue; here are some of them –

1. Cumulative and Non cumulative Preference shares – Cumulative preference shares give the right to the preference shareholders to receive arrears of dividend which were not paid in previous years due to company making loss. While Non- cumulative Preference shareholders do not have right like Cumulative preference shareholders and therefore they cannot demand any arrears of dividend which were not paid during previous years by the company.

2. Participating and Non Participating Preference shares – Participating Preference shareholders have the right to receive any remaining profit which is left after payment of dividend to the equity shareholders, while Non Participating Preference shareholders do not have such rights.

3. Convertible and Non Convertible Preference shares – Convertible Preference shares can be converted into equity shares if preference shareholder decides to do so while Non Convertible Preference shares does not have any such right.

4. Redeemable and Non Redeemable Preference shares – Redeemable Preference shares are those shares which have to be repaid by the company after a fixed period of time from the date of issue of such shares while Non Redeemable Preference shares cannot be redeemed repaid by the company except on winding up of the company.

32 comments… add one

  • esmatullah mutahar

    thanks for the one who has shared this beneficial notes about the different type of preference shares …………it was really helpful for me ,,,,,,,,,,,,thanks again

    • Vinish Parikh

      Glad you liked it

  • Karunesh jha

    Thanks, due 2 this its easy for us…

    • Vinish Parikh

      I am happy to hear that i am able to clear some doubts about this complex topic

  • sumana

    easy 2 understand…………..

  • kartheek

    it is a wordful day to prepare the shares for prestentation

  • Thanks for given easily understood notes.

  • Ada

    Thanks a lot its very usefull to me

  • alekhya

    thankxxx fr dis information…….

  • shivu

    Thanks its very easy to understood….

  • NITIN

    Thanks for given easily understood notes.

  • It is actually made simple to understand the types of preference shares

  • kisshore

    thank u so much… it is very useful notes for finance learners

  • Deepali

    its very helpful in making my presentation. thanks

  • mishaal saleem

    thanks it is very useful for me to increase my knowledge

    • Vinish Parikh

      The idea behind this site is to help people in increasing their most important wealth that is knowledge

  • pinal patel

    thnks to make easy for us

  • sufzal khan

    Thanks……coz its language iz to easy n everyone can easily understand it widout any difficulty…!!!!!

  • Hassan m yusuf

    Thanks very much 4 providing very comprehensive note.

  • muzi

    thankx for info it useful, reader friendly and understandable.

  • muskan

    gud job yar it was very easy to understand

  • Loveth

    Thanks much, it has really help me alot by increasing my level of understanding about preference shares also guiding me thru to impact d great understanding to others. This is the best, i’ll recommend it……

    • Vinish Parikh

      You are welcome, and i will make sure that readers like you never get disappointed with this website

  • umema faheem

    its a useful for me a lot to complete the preference share topic nd thnx to provide d information

    • Vinish Parikh

      Thanks for commenting

  • chandan sharma

    it`s easy in language and also to understand……thks.

    • Vinish Parikh

      I always try to write complex topics in simple language, i am happy that my hard work is paying off

  • Name*

    thanxxx.its short and easy to understand

  • chandrakant rane

    thank i like this

  • Neha Nayak

    thank a lot… i liked it as it is very easy to understand ….

    • Vinish Parikh

      Thanks neha, glad you liked it.

  • Njogu peter

    Thank you its well elaborated

Leave a Comment