Kinds of Preference shares

Kinds of Preference shares There are eight types of preference shares. In case of dissolution of the company, any of the eight types would be paid out before other types of equity. Cumulative Preference shares: As the word indicates, all dividends are carried forward until specified, and paid out only at the end of the specified period. Non-cumulative Preference shares: The opposite of cumulative, obviously. Dividends are paid out of profits for every year. There are no arrears carried over a time period to be paid at the end of the term Redeemable Preference shares: Such preference shares can be claimed after a fixed period or after giving due notice. Non-Redeemable Preference shares: Such shares cannot be redeemed during the lifetime of the company, but can only be obtained at the time of winding up (liquidation) of assets. Convertible Preference shares: The shares can be converted into equity shares after a time period or as per the conditions laid down in the terms. Non-convertible Preference shares: Non- convertible preference shares cannot be, at any time, converted into equity shares. Participating Preference shares: Such shares have the right to participate in any additional profits, after paying the equity shareholders. The surplus of profit is apart from the fixed dividend paid up for preference shares. Non-Participating Preference shares: Non- participating preference shares do not possess any right to participate in surplus profits or any surplus gained at the time of liquidation of the company.