Preference Shares

Preferred shares, also known as preference shares or preferred stock, represent a type of security that grants the holder ownership in a corporation along with a priority claim to the company's earnings and assets. These shares hold a superior position compared to common shares but have a lower standing than bonds concerning their entitlement to the company's assets. In contrast to common shareholders, holders of preferred shares typically receive regular fixed dividends. In essence, preference shares bestow special rights upon their owners in comparison to regular equity shareholders. Notably, in situations such as dividend distributions or bankruptcy, preference shareholders are prioritised for payment, enhancing the security and appeal of preference shares over common equity shares.