**Important: We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
**By submitting your email address, you also sign up for Profit Hunter, a daily newsletter from Equitymaster
covering exciting investing ideas and opportunities in India.
Do you like it when you get a special treatment compared to others? We’re sure you do...
Preference shares are somewhat like that. These are the shares which have a special treatment.
A firm issues preference shares to raise capital. This becomes part of the preference share capital.
Preference shares represent ownership in a company. Shareholders of preference shares enjoy the preference over common shareholders in this case.
Suppose a company goes bankrupt and files for bankruptcy. Now, preferred shareholders will get the first preference and receive the company’s assets before common shareholders get their share.
Not just assets, preference shareholders receive dividends, share of profits, etc. before the common shareholders.
Preference shares can also be converted into equity shares. Some shares can be converted while some need prior approvals and permissions.
An important point here is that even though preference shareholders have the right to share company’s earnings, dividend first, they do not have voting rights like the equity shareholders.
There are various types of preference shares. Some of the types include:
Check out Equitymaster’s series on how to invest in the stock market. Here, you will receive all the basic information which will help you get started in the world of investing.
May 3, 2023
As Go First files for bankruptcy, airline stocks appear to be the biggest beneficiaries amid rising airfares. Find out other stocks that may be impacted.
Jan 5, 2022
As an investor don't forget that such a crisis can impact any company which fails to recognise liquidity risks.
Feb 27, 2020
The government focus on this sector will lead to huge wealth creating opportunities in the near future.
Jul 12, 2017
Luckily, we warned subscribers not to buy into the company's story...
Nov 16, 2011
In this edition of the 5 Minute Wrapup, Equitymaster discusses whether failing businesses should be bailed out or allowed to go bankrupt.
Mar 10, 2023
Are the super powers happy to watch India transform from being merely an influential entity into one whose weight and preferences define international politics?
Nov 15, 2021
Here are seven ways you could lose everything you own to the point of bankruptcy.
Aug 22, 2018
Rahul discovered an extremely simple yet enormously profitable investing idea in Graham's 40-year old interview.
May 18, 2015
Mr Tarapore discusses measures to unleash the power of gold savings.