Question

Why issue compulsorily convertible preference shares instead of equity

Answer 1

Compulsorily convertible preference shares are those that have to be converted into ordinary shares after a predetermined date. PE investors link the time of conversion to the company's performance. This essentially means that the shares get converted only after the company achieves the promised growth.

Answer 2

hi dude

Preference shares also have a number advantages for the issuing company. The lack of shareholder voting rights that may seem like a drawback to investors is beneficial to the business because it means ownership is not diluted by selling preference shares the way it is when ordinary shares are issued.

hope it helps