equity shares and preffered shares

difference between equity shares and preferred shares ? when the company choose to give shares to particular preferred and equity

1 Answer(s)


1. Rate Of Dividend
The rate of dividend on equity shares may vary from year to year depending upon the availability of profit. Preference share holders are paid dividend at a fixed rate.

2. Arrears Of Dividend
Equity shareholders can not get the arrears of past dividend. Cumulative preference share holders can get the arrears of past dividend.

3. Redemption
Equity shares can not be redeemed except, under a scheme involving reduction of capital. Preference shares can be redeemed as provided by the articles and terms of issue.

4. Voting
Equity shareholders enjoy voting rights. Preference shareholders do not have the right to participate in the management of the company.

5. Payment Of Dividend
Payment of dividend to equity share is made only after paying to preference shares. Preference shares have a preferential right to receive dividend before equity shares.