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Features of Preference Shares

Features of Preference Shares:

The following are the important features of the preference shares:

1. Maturity period: Normally preference shares have no fixed maturity period except in the case of redeemable preference shares. Preference shares can be redeemable only at the time of the company liquidation.

2. Residual claims on income: Preferential sharesholders have a residual claim on income. Fixed rate of dividend is payable to the preference shareholders.

Features of Preference Shares
[Post Image Courtesy of Sira Anamwong at FreeDigitalPhotos.net]

3. Residual claims on assets: The first preference is given to the preference shareholders at the time of liquidation. If any extra Assets are available that should be distributed to equity shareholder.

4. Control of Management: Preference shareholder does not have any voting rights. Hence, they cannot have control over the management of the company.

Sourced From: Financial Management By C. Paramasivan And T. Subramanian

About Author Mohamed Abu 'l-Gharaniq

when an unknown printer took a galley of type and scrambled it to make a type specimen book. It has survived not only five centuries.

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