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after all liabilities payment. Shareholders.
Source of Division Equity Shares Preference Shares
In the case of company In the case of company
Capital insolvency Equity insolvency Preference
Payment/Liquidation shareholders payment settled shareholders payment is repaid
or repaid at the end. before the equity shareholders.
Equity shareholders have the Generally, Preference
right to vote on all matters of shareholders do not carry the
Voting Right
the company. voting rights but in some cases,
they get the voting rights.
Equity shares cannot be Some types of preference share
Convertibility converted. can be converted to Equity
shares.
There is no provision to Preference shareholders get the
accumulate the previous year previous year’s pending
dividend; due to this Equity dividend payment in certain
Amount Overdue
shareholders will not get cases (Depend on which Type
previous year overdue of preference share they hold).
payment of dividends.
A risk associated with Equity A risk associated with
Risk shares is higher. preference share is less than
compared to Equity share.
Investors who are ready to Investors who want a stable
Investors take risk of invest in Equity return on investment invest in
shares. Preference shares.
The dividend rate on Equity The dividend rate is fixed at the
Decision of Rate share is decided by the board time of the issue of preference
of the company. shares.
Employee Stock Option Plan (ESOP)
