Preference capital is a unique type of long-term financing in that it combines some of the features as well as debentures. As a hybrid security form of financing, it is similar to debenture as: (i) it carries a fixed stated rate of dividend, (ii) it ranks higher than equity as a claimant income assets, (iii) it normally does not have voting rights and (iv) it does not have a share ual earnings assets. It also partakes some of the attributes of equity capital, namely, and on preference capital is paid out of divisible after tax profit, that is, it is not tax, (v) payment of preference dividend depends on the discretion of management. that not an obligatory payment and non-payment does not force insolvency liquidation and curable type of preference shares have no fixed maturity date.


The main attributes of preference shares capital are discussed below.

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