Preference shares are paid to shareholders before common stock dividends are paid out. Share premium can not be distributed, however, but under certain circumstances can be reduced.
Security premium in management accounting is the difference between the nominal value and the selling price of shares.
When shares are issued at value which is more than face value then it is called shares issued at premium.
Preferense share has the preference over all other kind of shares for payment at the time of liquidation and it gets fixed percentage of interest even in case of loss.Non-Voting shares are those share which donot have the right to vote in meetings.Ordinary shares has the voting rights and share profit as well as loss and has the payment priority at last from any other debt.
When shares are issued at price which is more than face value then issuance of shares is called issued at premium and that excess amount above face value is called share premium.
Well the company wants to profit. And issuing shares at premium provides capital to the company without changing its equity capital.
what is defference between normal and preference shares
Share premium is used for many purposes and 1 of them is redemption of preference shares and debentures
Security premium in management accounting is the difference between the nominal value and the selling price of shares.
Preference shares have preference over ordinary shares with respect to dividend payments and in the event of liquidation i.e. payments are made to preference share holders before any payments are made to holders of ordinary shares. Preference shares usually carry a fixed dividend amount, are usually callable at the option of the issuing company and generally have no voting rights. They may also have an option for conversion to ordinary shares. Detailed answer here: http://financenmoney.in/types-of-share/
Preference shares are shares whose dividends are paid out first before ordinary shares dividends. They so called (preference shares) because they have 'preference' over ordinary shares for payment of dividends.
i want 2 convert the equity shares of my cmpany into preference shares
Total equity and common equity are separate things where there is preference shares are also issued in that case only shares issued to common share holders are included in common equity while in total equity shares issued to preference shareholders are also included.
1)Preference Shares have 2 preferences first payment of dividend in every year in which dividend is proposed & first share capital of preference shares will be payab;e @ winding up or liquidation of the company,where as equity share holders dividend after preference share holders & even share capital capital is also paid after paying to preference share holders. 2)preference share holders are not owners of the company and do not enjoy any voting right. Where as Equity Shares has voting right & they are the real owners of company. 3)Preference Shares have a finite tenure and carry a fixed rate of dividend where as dividend to equity shares is payable rest of the dividend payable after preference share holders.
it is a preference shares which willbe converted compulsory into equity shares after a stipulated time
Ordinary shares are those which issue to normal shareholders which are last in payment priority list and only receives dividend in case of profit and liquidity is good. Preference share has preference over payment form common share capital and it receives fixed percentage of interest even in case of loss to business.
1 - Both are part of share capital of business 2 - Both have the voting powers 3 - Both are equity based financing tools.
Lets understand meaning of Preference Share in Layman language. As name suggest preference shares are those kind of shares which has preference in payment of dividend, and price of shares over equity shares. If company earn net profit, then first return to preference shareholders are given at first, and then to equity shareholders.