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Preference shares:

Preference shares refer to a form of shares which lie in between pure equity and debt.

  • These are shares which do not carry voting rights
  • The amount of dividend, which is to be paid is fixed beforehand but is paid only in the event of profit subsequent to the payment of fixed obligations such as interest and tax.
  • Claims of these shareholders carry higher priority than ordinary share holders but lower than debt holders
  • These can be issued for subscription from the general public only after a public issue of ordinary shares
  • Subscription can be solicited either through private placement or a public issue


Back to Types of Equity Instruments

Other Equity Instruments
Equity Shares

Depository Receipts (GDRs and ADRs)
Warrants

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