Question

What is meant by a 'Share'? Give any two differences between 'Preference Shares' and 'Equity Shares'.

Answer 1

A share refers to the unit into which the total share capital of the company is divided.

Differences:

$$\begin{array}{cc}\text{Preference Shares}& \text{Equity Shares}\\ \text{(i) Preference Shares carry a preferential right at}& \text{Equity Shares does not have any such}\\ \text{the time of re-payment of capital and at the}& \text{right in terms of re-payment of capital}\\ \text{time of payment of dividend.}& \text{and payment of dividend.}\\ \text{(ii) Preference shares may be converted to}& \text{Equity Shares are not convertibe.}\\ \text{Equity Shares, if the terms of issue so}& \\ \text{provide.}& \end{array}$$