difference between Equity Capital and Preference capital?
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Answer Posted / nancy
Equity shareholders are the one who have ownership rights in
the company . They are eligible to get dividend and whenever
in case of winding up of the company or distributions of
income is there , they are the last one to get their shares.
They have voting right and participate in management of a
company.
Preference share holders can be called as hybrid between
debt and equity. If the company has earned profits , then it
can declare dividend to them but unlike Debt, company is not
obliged to pay them in case of loss. They cannot do
compulsory winding up of company (unlike Debt) but whenever
profits are distributed, they are given preference over
equity shareholders . They do not have voting rights and do
not generally participate in management of company.
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