Question

What are the right of preference shareholders

Answer 1

Preference shareholders or preferred share holders or prefered stockholders are the shareholders whose stock is paid first. They get their share of the dividends or profit first before other common shareholders (public shareholders).

In case the company loses and some liquidation goes on, then preferred stockholders get their share first from selling of some assets of the company.

They are more secure in terms of their investment.

They receive a fixed percentage as dividends unlike public (equity) shareholders. Public shareholders receive variable dividends.  The fixed dividend is decided before. They receive the fixed dividend for the lifetime of the company. 

The preference shares can be redeemable or not redeemable.

Preference shareholders do not usually have voting rights on the matters of the company. Usually equity shareholders have.  Preference shareholders have voting rights only for the matters related to their dividends etc.

Answer 2

While an equity shareholder has the right to vote on every resolution placed before the company, a preference shareholder has the right to vote only on those resolutions which directly affect the rights attached to its preference shares i.e. any resolution for winding up of the company or for the repayment or reduction ...