Preference Shares

Quick Summary of Preference Shares

Shares in a company which give the holder a preference (although not an automatic right) to receive a dividend before any ordinary share dividend is declared.

Capital stock that pays a specific dividend before common stock holders receive dividends, and which takes precedence over common stock in the event of a liquidation. Preference shares, like common stock, represent a portion of a company’s ownership, but preferred stockholders do not have the same voting rights as common stockholders. Preference shares, unlike common stock, pay a fixed dividend that does not fluctuate, though the company is not required to pay this dividend if it lacks the financial ability to do so. The primary advantage of owning preference shares is that the investor has a stronger claim on the company’s assets than common stockholders. Preferred stockholders always receive dividends first, and if the company goes bankrupt, preferred stockholders are paid off before common stockholders. Preferred stock is classified into four types: cumulative preferred stock, non-cumulative preferred stock, participating preferred stock, and convertible preferred stock. Also known as preferred stock.

Examples of Preference Shares in a sentence

Ordinary or preference shares may be issued.
Zero dividend preference shares are being issued at a ratio of 30 for every 70 ordinary shares.
You can put me down for forty Preference shares.
The preference shares are redeemable at par value six years after their date of issue.
Venture capitalists often demand ordinary shares as well as loan capital and preference shares in return for their investment.
Currently there is no requirement to recognise minority interests in respect to the preference shares.
The transferable preference shares refer to those convertible into ordinary shares.

Synonyms For Preference Shares

Cite Term

Definition Sources