Features of Preference Shares:
The following are the important features of the preference shares:
1. Maturity period: Normally preference shares have no fixed maturity period except in the case of redeemable preference shares. Preference shares can be redeemable only at the time of the company liquidation.
2. Residual claims on income: Preferential sharesholders have a residual claim on income. Fixed rate of dividend is payable to the preference shareholders.
3. Residual claims on assets: The first preference is given to the preference shareholders at the time of liquidation. If any extra Assets are available that should be distributed to equity shareholder.
4. Control of Management: Preference shareholder does not have any voting rights. Hence, they cannot have control over the management of the company.
Sourced From: Financial Management By C. Paramasivan And T. Subramanian
The following are the important features of the preference shares:
1. Maturity period: Normally preference shares have no fixed maturity period except in the case of redeemable preference shares. Preference shares can be redeemable only at the time of the company liquidation.
2. Residual claims on income: Preferential sharesholders have a residual claim on income. Fixed rate of dividend is payable to the preference shareholders.
[Post Image Courtesy of Sira Anamwong at FreeDigitalPhotos.net]
3. Residual claims on assets: The first preference is given to the preference shareholders at the time of liquidation. If any extra Assets are available that should be distributed to equity shareholder.
4. Control of Management: Preference shareholder does not have any voting rights. Hence, they cannot have control over the management of the company.
Sourced From: Financial Management By C. Paramasivan And T. Subramanian
Features of Preference Shares
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