Comment on Commonly Used Jargons

Sankari Ramana commented on 03 Sep 2018, 06:16 PM

Preference shares are those shares which get a fixed dividend payout on face value if the company decides to pay out dividends. The rate of dividend is pre-fixed , for example, if a company issued 10% Preference Share Capital then the dividend to PS holders will be (FV*no.of shares )*10% . Whereas dividend to equity shareholders will fluctuate based on the remaining profits of the company after all pay outs.
As ESH take higher risk because of uncertainty of dividend income (not to mention the higher return they enjoy during profit season), they get voting rights (used in General Meetings) and PSH do not have the voting rights.

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