Equity shares & preference shares are the only types of shares issued by a company. Get to know the Difference Between Equity shares and Preference shares. and their advantages.

1. Difference Between
Equity Shares And Preference
Shares

2. Companies required money to run their business. Money work as the lifeline for any business.
Companies raise capital by issuing share of the company. So company divided its capital into small parts of
the equal values and each part is called a shares and each shares of the company carried equal values of
company ownership.
This is one of the popular way of raising capital for company and through this individual user can also take a
part in the ownership and get benefit.
There are two types of shares issued by the company for the expansion of the company.
1. Equity Shares
2. Preference shares
Introduction

3. ● The amount raised by issuing equity shares is the money of the
company, since they are securities issued under its share
capital.
● When a company needs a large amount of funds for a long
period of time, equity shares are a common source of long-term
capital.
● Equity shareholders are also called common shareholders as
they do not have any preferential rights like preference
shareholders.
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What are Equity Shares?

4. What are Preference Shares
● Preference shares are those shares that give special preferences
right to its shareholder in concern to dividends payment and
liquidation. Which are primary advantages of preference
shareholders. Over equity shareholders.
● Preference shares are also known as hybrid shares. Because they
also carry the features of debentures and equity shares.
● Preference shares have a fixed rate of dividends attached to them
similar to that of debentures in most cases. preference
shareholders are received dividends when the company is in a
position to do so.

5. Difference between Equity Shares and
Preference Shares
.
Equity Shares Preference Shares
Definition Equity shares are common shares with
no preference rights over other
shareholders.
Preference Shares are shares that give
preferential rights to its shareholders over
dividends & in case of liquidation over equity
shares.
Dividend Preference Equity shareholders are given dividends
after fulfilling all other external liabilities
and dividends to payment to preference
shareholders.
Preference shareholders are preferred over
equity shareholders when it comes to dividend
payment as they have a preferrential right of
receiving dividends over equity shareholders
whenever the company decide to give dividends.
Redemption of Shares Equity Shares cannot be redeemed by
the company until the company is in
existence.
Preference shares can be redeemed by the
company after a fixed period of time or after the
completion of its maturity period.

6. .
Voting Rights Have Voting Rights. Preference shareholders do not enjoy any such voting rights.
Dividend Payment Equity shareholders do not have a fixed rate of
dividend and Equity Shareholder receive dividend at
end.
Preference shareholders receive a predetermined fixed rate
irrespective of the quantum of profit incurred by the company.
Liquidation In case of liquidity : Equity shareholder will get claim
in last, after external debt and preference
shareholder.
In this case preference shareholder will be preferred over
equity shareholders.
Dividend Arrears In case of not payment of dividend in particular year,
the dividends are not transferred to next year.
In preference shares if in case of not payment of dividend in
particular year, the dividends are transferred to next year.
Convertibility
Equity shares cannot be converted into preference
shares.
Preference shares can be converted into equity shares, if
they are convertible preference shares.
Risk Equity shareholders are at higher risk as their
dividend payment depends on the profits incurred by
a company.
Preference shareholders are at a lower risk in because they
receive fixed rate of dividend every year and get first
preference over equity shareholders.

7. Types of Equity Shares
1. Authorized Share Capital
2. Issued Share Capital
3. Subscribed Share Capital
4. Paid-up Share Capital
5. Called-up Share Capital
6. Rights Issue
7. Sweat Equity Shares Bonus Shares
Know about the feature of equity shares and preference shares

8. Types of Preference Shares
1. Cumulative Preference Shares
2. Non-Cumulative Preference Shares
3. Convertible Preference Shares
4. Non-Convertible Preference Shares
5. Redeemable Preference Shares
6. Non-Redeemable Preference Shares
7. Callable Preference Shares
8. Adjustable-Rate Preference Shares
9. Convertible Preference Shares
Know in-depth about the features and types of preference shares.

9. Thank You
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