What is the difference between equity share and preference share?

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Learn Mathematics +2 Shares and Dividends

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Mohamed Fatin Nizami

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Preference share carry fixed rate of dividend whereas equity shares have fluctuating rates of dividend based on the profits of the company.
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Dear Student, Definition of Equity Shares: Equity shares are the ordinary shares of the company. The holder of the equity shares are the real owners of the company, i.e. the amount of shares held by them is the portion of their ownership in the company. Definition of Preference Shares: Preference Shares,...
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Dear Student, Definition of Equity Shares: Equity shares are the ordinary shares of the company. The holder of the equity shares are the real owners of the company, i.e. the amount of shares held by them is the portion of their ownership in the company. Definition of Preference Shares: Preference Shares, as its name suggests, gets precedence over equity shares on the matters like distribution of dividend at a fixed rate and repayment of capital in the event of liquidation of the company. read less
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1. As far as dividend and refund of capital in case of winding up is concerned it is the preference shareholders who get paid before the equity shareholders. 2. In case of preference shares rate of dividend is fixed while equity shareholders get dividend on the basis of performance of company, sometimes...
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1. As far as dividend and refund of capital in case of winding up is concerned it is the preference shareholders who get paid before the equity shareholders. 2. In case of preference shares rate of dividend is fixed while equity shareholders get dividend on the basis of performance of company, sometimes when company make loss then they are not paid any dividend. read less
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