difference between Equity Capital and Preference capital?




Answers were Sorted based on User's Feedback



Answer / arun sidharthan

Equity share holders are the owners of the company.They
have the right to receive dividends.Preference share
holders has the prference to get fixed rate of interest of
profit for their shares.

Is This Answer Correct ?    270 Yes 66 No

Answer / kranthi

equity shares does not have the preference rights, where
preference share holders carry the preference rights,
preference in respect of fixed dividend, the rate of
dividend is fixed in advance

Is This Answer Correct ?    153 Yes 40 No

Answer / maheswari.m

Equity share holders are the owners of the company.They
have the right to receive dividends.Preference share
holders has the preference to get fixed rate of interest of
profit for their shares.

Is This Answer Correct ?    93 Yes 23 No




Answer / ashish gandotra

both these sources of capital are lenders to the company.
equity shareholders have right on the residual earning of
the company. They are owners of the compant and have right
to attend the AGM. Rate of dividend to them is not fixed
and depends on company earnings.

Prefrence shareholders are not the owners of the company,
but have prefential right over equity shareholders in
relation to dividend declaration by the company. rate of
dividend is fixed in their case.

Is This Answer Correct ?    43 Yes 4 No

Answer / ketan deepak

In shares there are two categories which is called as
equity share capital and preference share capital. In
equity share capital these person are owner of the company.
Preference share holder are get fixed rate of income
afterwards something is left then it will in a profit
sharing ratio of a partner.

Is This Answer Correct ?    43 Yes 7 No

Answer / phaneendra

equity share capital holders are woners of the company.but
preference share capital holders not woners ofthe
company.prefornece sahre hoders are voteing rights are not
applicable.but equty share holders are voting right is
avilable

Is This Answer Correct ?    62 Yes 31 No

Answer / samta

Equiy shareholder: known as "residual owner" of the
company.

1) After all the obligations of the company are
over, the Equity Share Holders get their share.

2) EQUITY SHARES are shares whose profit sharing
depends on the PROFIT MAKING of the Company.

3) Dividends to Equity Share holders is optional
and at company's discretion.

4) Has voting rights.

5) Has right to attend BOD meeting

6) equity share holder can take decisions for the
company and can obtain the profit or loss
incurred by the company.

7) real capital of the campany.


Preference Share:

1) Dividend is a fixed income to them

2) They get dividend at a fixed rate of interest,
irrespective of the Profit Making of the Company.
3) if company fails to pay the fixed rate of
dividend in any particular year due to loss,then the next
year it will pay dividend of two years to them on the
otherhand

4) cannot take decisions for the company

5) Prefence share is like loan for the company.

Is This Answer Correct ?    32 Yes 2 No

Answer / swati bansal

sometimes preference shares are issued with a clause wherin
if company fails to pay the fixed rate of dividend in any
particular year due to loss,then the next year it will pay
dividend of two years to them on the otherhand no such
clause is possible in case of equity shares.

Is This Answer Correct ?    36 Yes 10 No

Answer / anamika

equity share holders are owners of company there is no
guarantee for the dividend to the equity shareholders they
have the right to participate in the meetings of company.

preference share holders have the preference in payment of
dividend ..they o not have any rights in the management of
company.

Is This Answer Correct ?    24 Yes 1 No

Answer / dileep varyani

Company generate equity capital only at the time of
incorporation and holds for life time which u can is like
fixed assets only fixed assets has life but equity remains
same.However equity shareholders recieve dividend of
company usually every year.

And

Preference capital actually company generate in mode of
preference share which is nothing but a short term required
capital for some specifice purpose say for new setup or for
some emergent project. However preference shareholder just
recieve a fixed ratte of interest on their money they
invested in company.

Is This Answer Correct ?    29 Yes 7 No

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