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Preference Shares

According to Section 85 of The Companies Act, 1956, a preference share is one which carries the ­following two rights:

  1. A right to receive dividend at a stipulated rate or of a fixed amount before any dividend is paid on equity shares.
  2. A right to receive repayment of capital on winding up of the company, before the capital of equity shareholders is returned.

The various types of preference shares are as follows:

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