Equity Shares and Preference Shares.
Give any two differences between 'Preference Shares' and 'Equity Shares'.
|Equity Shares||Preference Shares|
These are the ordinary shares which can claim dividend and return of capital only after payment to others.
|These are the shares which enjoy preference over equity shares in case of dividend and return of capital.|
Rate of Dividend
Equity shares are paid dividend at fluctuating rate
Preference Shares are paid dividend at a fixed rate.
Equity share holders enjoy normal voting rights, through which they participate in the management of the company
|Preference shareholders enjoy restricted voting rights. They can vote only on those matters which affect their interest directly|
Equity shares are of low face value i.e. Rs. 10/- or even less
|Comparatively preference shares are of high face value i.e. Rs 100/-|
Market value of equity shares changes as per company’s financial positions and profitability.
|Market value of preference shares remains consent|
An element of risk exits in equity share capital as dividend and return of capital is uncertain.
|Investment in preference shares is relatively safe due to preferential treatment in case of dividend and return of capital|
Right Issue/Bonus shares
Equity shareholders are eligible for bonus shares, if issued by the company
|Preference Shareholders are not eligible for bonus shares/right issue, if issued by the company.|
Equity shares are not redeemed during the life time of the company.
|Redeemable preference shares are redeemed as per the agreed terms.|
Video Tutorials For All Subjects
- Types of Shares - Preference Shares Equity Shares