Preference shares are also known as preference stocks.
A limited company issues these shares only after equity shares.
The persons who receive preference shares are called preference shareholders.
Generally, these shareholders have preference rights in dividend received.
Dividend rates are pre fixed.
Preference shareholders get dividend after interest on debenture but before equity shareholders.
At the time of winding up, preference shareholders get money after all the debts but before equity shareholders.
Preference share have various type. They are:
If company cannot earn profit for dividend in any financial year, those arrears dividends are accumulated for next year when company earns profit.
If Article of Association (internal rules and regulation of the company) of the company is silent about the accumulated dividends, it is assumed that such shares are cumulative.
If company cannot earn profit for dividend in any financial year, those arrears dividends are not accumulated for next year, it is known non-cumulative preference shares.
These preference shareholders cannot get arrears dividend for next year.
According to article of association, these shares can be redeemed (buy back) after expired date.
The terms and condition of the redemption is specified at the time of issuing.
These types of shares can be redeemed only at the time of liquidation of the company.
Capital amount of the shares is not paid back to shareholders before winding up of the company.
#####
Click on link for YouTube videos
SHARE (ACCOUNTING FOR SHARE) http://tiny.cc/889jkz
SHARE IN Nepali http://tiny.cc/k99jkz
DEBENTURES http://tiny.cc/yeakkz
FINAL ACCOUNT: CLASS 12 http://tiny.cc/e89jkz
FINAL ACCOUNT IN NEPALI http://tiny.cc/w89jkz
WORK SHEET http://tiny.cc/579jkz
RATIO ANALYSIS (ACCOUNTING RATIO) http://tiny.cc/4fakkz
FUND FLOW STATEMENT http://tiny.cc/wiakkz
CASH FLOW STATEMENT http://tiny.cc/8gakkz
THEORY ACCOUNTING XII http://tiny.cc/nfakkz
THEORY: COST ACCOUNTING http://tiny.cc/tfakkz
COST ACCOUNTING http://tiny.cc/p29jkz
LIFO−FIFO http://tiny.cc/dgakkz
COST SHEET, UNIT COSTING http://tiny.cc/w49jkz
COST RECONCILIATION STATEMENT http://tiny.cc/829jkz
#####
These types of shares can be converted into another preference shares, equity shares or debentures if mentioned in Article of Association.
These converting may be at par, at discount or at premium.
All the terms and conditions are mentioned at the time of issuing.
These types of shares cannot be converted into another preference shares, equity shares or debentures except if not stated.
These shareholders can get extra/surplus dividend if there remains some dividend after providing dividend to equity shareholders
If article of association is silent, these shareholders cannot get extra/surplus dividend.
***********
Thank you for investing your time.
Please comment on article.
You can help me by sharing this article at your social media platform.
Jay Google, Jay YouTube, Jay Social Media
जय गूगल, जय युट्युब, जय सोशल मीडिया