Merits

The advantages for the investors are: (i) stable dividend. (ii) the exemption investors on preference income to the extent of dividend paid out. The issuing company several advantages, namely, (i) no legal obligation to pay preference dividend and dividend without facing legal action, bankruptcy. (ii) redemption can be delayed without an penalties, (iii) as a part of net worth, it improves the creditworthiness- borrowing capacity and (iv) no dilution of control.

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