CLOSE X
Algo Trading
Home

Blogs

Stock Market Blogs

What are Preference Shares? August 02 2017Stock Market Trading

Visit Count: 273

What are Preference Shares?

Whenever we study about a company, we often come across the words equity shares and preference shares. In this article, we shall study about the Preference Shares.

Click on the link to know about: What are Equity Shares?

What are Preference Shares?

Preference Shares are those shares that have higher priority in comparison to equity shares. The dividend is firstly paid to the preference shareholders and later to the equity shareholders. At the time of liquidation, capital is first paid to the preference shareholders and then to equity shareholders.

Let us now have a look at the features of Preference Shares.

Features of Preference Shares

·         Preference shareholders do not have any voting rights. But they can claim voting rights if they do not receive a dividend for two or more years on cumulative preference share and three or more years on non-cumulative preference shares.

·         Preference shareholders receive dividend only if the company has earned profits and board members propose to give a dividend.

·         Just like the debentures, the rate of dividend is fixed on preference shares.

·         Preference shares are a source of finance for the companies.

A company can issue different types of Preference Shares. Let us have a look at them.

Different Types of Preference Shares

·         Cumulative Preference Shares

·         Non-Cumulative Preference Shares

·         Redeemable Preference Shares

·         Non-Redeemable Preference Shares

·         Convertible Preference Shares

·         Non-Convertible Preference Shares

·         Participating Preference Shares

·         Non-Participating Preference Shares

Preference shares have many advantages; let us have a look at the advantages of preference shares.

Advantages of Preference Shares

·         Cautious investors get fixed rate of interest on preference shares. So investors who want regular income invest in preference shares.

·         Preference shares do not hold any voting right. So, the company can issue equity shares to raise capital without diluting the control of preference shareholders on the company.

·         Dividends are to be paid only if there are sufficient profits in the hands of the company.

·         No charge can be created on preference shares to raise capital for the company.

·         Since there are many different types of preference shares; the company has the flexibility to issue the type of preference shares that suits it the most.

Conclusion

Indira Securities is a one stop solution for all your financial investment needs. By opening a demat account with us, you can trade in equities, commodities, currency and derivatives. We give our inputs to our clients based on the stock analysis tools. Avail the most convenient and hassle free stock investment services from us. We help you understand the different types of trading styles so that you can make more profits. Contact us via call or email for any further assistance.

COMMENTS
Categories

Prevent Unauthorized Transactions in your demat and trading account --> Update your Mobile Number/Email id with your Depository Participant and Stock Broker. Receive alerts on your Registered Mobile for all debit and other important transactions in your demat/trading account directly from CDSL and Stock Exchanges on the same day.........issued in the interest of investors...

1. Stock Brokers can accept securities as margin from clients only by way of pledge in the depository system w.e.f. September 1, 2020.

2. Update your Mobile Number & Email Id with your Stock Broker/ Depository Participant and receive OTP directly from Depository on your Email Id and/ or Mobile Number to create pledge.

3. Pay 20% upfront margin of the transaction value to trade in cash market segment.

4. Investors may please refer to the Exchange's Frequently Asked Questions (FAQs) issued by NSE vide. Circular No. NSE/INSP/45191 dated: July 31, 2020 and NSE/INSP/45534 and BSE vide Notice No. 20200731-7, dated: July 31, 2020 and 20200831- 45 dated: August 31, 2020 and dated: August 31, 2020 and other guidelines issued from time to time in this regard.

5. Check your Securities/ MF/ Bonds in the Consolidated Account Statement issued by NSDL/ CDSL every month.

"As per the directives of CDSL and esteemed Exchanges, it has been made mandatory for every client to furnish their latest KYC details viz. Valid Mobile No., Email- Id & Income range on or before 31.05.2021 else your Account will be marked as Non Compliant and will be Freezed till the compliance of such requirement."
REGISTRATION NOS:

INDIRA SECURITIES PVT.LTD. (SEBI REG.NO.):NSE TMID: 12866, BSE TMID: 663, CDSL DPID: 17000 SEBI REG. NO.: INZ000188930, MCX TM ID: 56470, NCDEX TM ID: 01277, CDSL REG. NO.: IN-DP-90-2015

DISCLAIMER:

"INVESTMENT IN SECURITIES MARKET ARE SUBJECT TO MARKET RISKS, READ ALL THE RELATED DOCUMENTS CAREFULLY BEFORE INVESTING."

INVESTORS GRIEVANCE

Jyoti Singh. Email: compliance@indiratrade.com. Call : 0731-4797275