question_answer

What are the differences between Equity Shares and Preference Shares?

Answer:

Ans.     Differences between Equity shares and Preference shares are as follows:

Basis of Difference	Equity Shares	Preference Shares
1. Payment of dividend	Equity dividend is paid after paying the preference shares dividend.	Preference dividend are paid prior to equity shares dividend.
2. Refund of capital	Equity share is refunded only after refund of preference share capital.	Preference shareholder has prior right to refund the capital over equity capital.
3. Rate of dividend	Rate of dividend may over the year in equity shares.	Rate of dividend is fixed in preference shares.
4. Arrears of dividend	Dividend cannot be accumulated in equity share	Arrears of dividend may be accumulated in preference shares.
5. Convertibility	It is not convertible.	It is convertible.
6. Redeemability	It is not redeemable.	It is redeemable.
7. Voting Right	Every shareholder enjoys voting right on general meeting.	Preference shareholders have no such voting rights.