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DIFFERENCE BETWEEN EQUITY SHARE CAPITAL & PREFERENCIAL SHAR
CAPITAL
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Answer Posted / anuj arora
Major Difference between Equity and Preferencial Share
capital.
1)Voting rights
Equity share holders: Yes
Preference Share holders: No
Equity share holders are having ownership and voting rights.
They make a decision to through his voting rights
2)Dividend
Equity shareholder may get dividend after geting prefernce
share holders.so company gives preference to shareholder
thats why we call as a preferencial shareholders.
Eg: PS look like this way: 15% Preferencial share capital
15% is the dividend.
3)At the time of liquidation
At the time of liquidation preference shareholder get back
the money from the company rather than equity shareholders.
4)Redeemable and convertiable.
Preference share capital can be redeemed and covertable as
a equity shares and debentures .But equity share capital
cann't be redeemable and convertable as a shares.
5)Equity Shareholders take more risk as compared to
preference shareholder, they carry fixed rate of dividend
i.e. if company is earning profit then it will distribute
the dividend at that fixed rate to prefernce shareholders
and then the remaining profit are distributed among equity
shareholders
| Is This Answer Correct ? | 9 Yes | 1 No |
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