The important types of preference shares are as follows −
If dividend is not paid at the end of any year due to loss or inadequate profit, the dividend will accumulate and will be paid in the forthcoming years.
Dividends cannot accumulate in the case of non-cumulative preference shares.
In addition to basic preferential rights, these shares may carry one or more of the following participation rights −
● Receiving dividends out of surplus profits left after paying dividends to equity shareholders.
● Having shares in surplus assets, which remain after the winding-up of the company.
In addition to basic preferential rights, these shares do not carry any of the following participation rights −
● Receiving dividends out of surplus profits left after paying dividends to equity shareholders.
● Having shares in surplus assets which remains after winding up of the company.
These shares can be converted into equity shares on or after specific dates as mentioned in the prospectus.
These shares cannot be converted into equity shares.
These shares can be redeemed by the company on or after a certain date after giving the prescribed notice.
These types of shares cannot be redeemed by the company. The shares are redeemed only on the occasion of winding up.