S.R
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EQUITY SHARES
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PREFERENCE SHARES
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Meaning
These are the ordinary shares which can claim dividend and return of capital only after payment to others.
Rate of Dividend
Equity shares are paid dividend at fluctuating rate.
Voting Rights
Equity share holders enjoy normal voting rights, through which they participate in the management of the company.
Face Value
Equity shares are of low face value i.e. Rs. 10/- or even less.
Market Value
Market value of equity shares changes as per company’s financial positions and profitability.
Risk
An element of risk exits in equity share capital as dividend and return of capital is uncertain.
Right Issue/Bonus shares
Equity shareholders are eligible for bonus shares, if issued by the company.
Redemption
Equity shares are not redeemed during the life time of the company.
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These are the shares which enjoy preference over equity shares in case of dividend and return of capital.
Preference Shares are paid dividend at a fixed rate.
Preference shareholders enjoy restricted voting rights. They can vote only on those matters which affect their interest directly.
Comparatively preference shares are of high face value i.e. Rs 100/-.
Market value of preference shares remains consent.
Investment in preference shares is relatively safe due to preferential treatment in case of dividend and return of capital.
Preference Shareholders are not eligible for bonus shares/right issue, if issued by the company.
Redeemable preference shares are redeemed as per the agreed terms.
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EQUITY SHARES PREFERENCE SHARES
