what do mean by prefer shares explain its feature.
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Preference shares are one of the important sources of hybrid financing. It is a hybrid security because it has some features of equity shares as well as some features of debentures. The holders of preference shares enjoy the preferential rights with regard to receiving of dividend and getting back of capital in case the company winds-up.
Features of Preference Shares:
Preference share have the following features:
1. Preference shares are long-term source of finance.
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2. The dividend payable on preference shares is generally higher than debenture interest.
3. Preference shareholders get fixed rate of dividend irrespective of the volume of profit.
4. It is known as hybrid security because it also bears some characteristics of debentures.
5. Preference dividend is not tax deductible expenditure
Features of Preference Shares:
Preference share have the following features:
1. Preference shares are long-term source of finance.
ADVERTISEMENTS:
2. The dividend payable on preference shares is generally higher than debenture interest.
3. Preference shareholders get fixed rate of dividend irrespective of the volume of profit.
4. It is known as hybrid security because it also bears some characteristics of debentures.
5. Preference dividend is not tax deductible expenditure
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