Question

Explain different Kinds of Preference shares.

Answer 1

There are eight types of preference shares:

1. Cumulative Preference shares: As the word indicates, all dividends are carried forward until specified.
2. Non-cumulative Preference shares: These are the opposite of cumulative.
3. Redeemable Preference shares: Such preference shares can be claimed after a fixed period or after giving due notice. ,
4. Non-Redeemable Preference shares: Such shares cannot be redeemed during the lifetime of the company.
5. Convertible Preference shares: The shares can be converted into equity shares after a time period. 
6. Non-convertible Preference shares: Non-convertible preference shares cannot be, at any time, converted into equity shares.
7. Participating Preference shares.
8. Non-Participating Preference shares.