Preference shares are shares
in which the owners of the shares are entitled to a fixed dividend or dividend
calculated at a fixed rate to be paid regularly before dividend can be paid in
respect of equity share. They also enjoy priority over the equity shareholders
in payment of surplus. But in the event of liquidation, their claims rank below
the claims of the company's creditors, bondholders / debenture holders. In short
they get preference over equity shareholders in case of payment of dividends on
in case of winding up of the company.
