Question

Give two main features of participating preference shares.

Answer 1

1. Right to Additional Profits:
   • Participating preference shareholders are entitled to receive a share in the surplus profits of the company after the payment of equity dividends.
   • This is in addition to their fixed dividend rate.
2. Right to Share in Surplus Assets on Winding Up: In case of liquidation, participating preference shareholders are entitled to a share in the surplus assets of the company after the repayment of capital to equity shareholders.