Question

What are Preference shares ??????​

Answer 1

Before understanding preference shares, we have to understand shares

${\bold \dag}\:{\underline{\underline{\pmb{\frak{\red{Shares\: :-}}}}}}$

The capital of the company is divided into small units called shares.

${\bold \dag}\:{\underline{\underline{\pmb{\frak{\purple{Preference \: Shares\: :-}}}}}}$

These types of shares provide a preferential right to the shareholders regarding

(1) Recieving a fixed rate of dividend & repayment of capital

(2) Receiving capital after the settlement of creditors of the company.

• They don't have voting right.

• Preference shares are also called less bearer of the company.

There are different types of shares

1) Cumulative and Non-Cumulative shares

2) Participating and Non-participating shares

3) Convertible and Non-convertible shares

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