Question

33. Explain the difference between equity shares and preference shares on following basis:
a. Participation in management
b. Sequence of dividend c. Refund of capital d. Voting rights​

Answer 1

Explain the difference between equity shares and preference shares on following basis:

a. Participation in management

➜ Equity shares are the ordinary shares of the company representing the part ownership of the shareholder in the company. Preference shares are the shares that carry preferential rights on the matters of payment of dividend and repayment of capital. The dividend is paid after the payment of all liabilities.

b. Sequence of dividend

➜ Equity shares represent the extent of ownership in a company. Preference shares come with preferential rights when it comes to receiving dividend or repaying capital. Shareholders receive dividends after all liabilities have been paid off.