Question

Differentiate between equity shares and preference shares on the basis of :

(a) Payment of dividend

(b) Refund of capital

(c) Rate of dividend

(d) Voting Rights

Answer 1

$\begin{array}{cccc}S.No.& \text{Basis}& \text{Equity Shares}& \text{Preference Shares}\\ \left(i\right)& \text{Rate of dividend}& \text{Equity shareholders get no fixed}& \text{Preference shareholders are offered}\\ & & \text{rate of dividend.}& \text{fixed rate of dividends.}\\ \left(ii\right)& \text{Preference in dividend}& \text{Equity shareholders are paid the}& \text{Preference is given in providing}\\ & & \text{dividend if any is left after the dividends then they are}& \text{dividends.}\\ & & \text{paid to preference shareholders.}& \\ \left(iii\right)& \text{Refund of capital}& \text{Equity share capital is refunded only}& \text{Preference share capital is refunded}\\ & & \text{when the company in liquidated.}& \text{(in case of redeemable preference}\\ & & & \text{share during the lifetime of the company.}\\ \left(iv\right)& \text{Voting rights}& \text{An equity share provides voting rights}& \text{No voting right to prefernce}\\ & & \text{to their shareholders.}& \text{shareholders.}\end{array}$