Question

10. Differentiate between equity share & preference share.​

Answer 1

Answer:

Equity Shares are commonly called Common shares and have both advantages and disadvantages over Preference shares.

• Equity shareholders are allowed to vote on company issues while preference shareholders can not.
• Preference shareholders get paid first between the two in the case that the company liquidates from bankruptcy.
• Preference shareholders get a fixed dividend that has to be paid before equity share dividends are paid.
• Preference shareholders can convert their shares to Equity shares but equity shareholders do not have the same courtesy.
• Preference shares can only be sold back to the company while equity shares can be sold to anybody.