Define preference share

Define preference share.

Preference shares refers to those share which enjoy the priority over the equity share in receiving dividend at fixed rate and making repayment of capital at the time of winding up of a company. Preference shareholder must be paid dividend before paying dividend to the equity shareholders. Such shares are less risky as the rate of dividend is prefixed and paid regularly. However, the preference shareholder do not have voting right to manage and control the company.

Leave a Reply

Your email address will not be published. Required fields are marked *