What Are The Different Types Of Preference Shares And Their Features or Characteristics

Answer:Different Types Of Preference Shares are: 

1.0 Convertible preference shares

  • have the privilege of being converted into ordinary shares at a specified date and rate. The terms of conversion are also being stated when the shares are issued.

 2.0 Cumulative preference shares

  • allows the company to pay any dividends that have not being paid in one year to be carried forward or cumulated to the following years for payment. 

3.0 Participating preference shares

  • are PRIVILEGE shares where the shareholders enjoy additional dividends besides the fixed rate. The amount of additional dividends is specified in the Articles and generally it is a proportion of dividend declared on ordinary shares. However, note that these participating preference shareholders will only be paid after all dividends on all other classes of shares have been paid. 

4.0 Redeemable preference shares

  • are shares that the company can buy back or redeemed at a specified future data at a predetermined price. The redemption details or terms are stated in the Articles when these shares are issued.


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