Types of Preference Shares

Preference Shares are of the following types:

1. Cumulative Preference Shares: Cumulative Preference Shares are those that have the right to accumulate unpaid dividends in future years if they are not paid during the current year.

2. Non-Cumulative Preference Shares:  Non-cumulative Preference Shares are those on which dividends do not accumulate. It means that if a company does not declare dividends for any year, the right of dividend of such shareholders for that year will be lost.

3. Participating Preference Shares:  Participating preference shares are preference shares that have the right to participate in the additional surplus of a company’s shares after a dividend at a certain rate has been paid on equity shares.

4. Non-Participating Preference Shares:  Non-participating preferences are those who do not have the right to participate in the company’s profits.

5. Convertible Preference Shares: Convertible preference shares are preference shares that can be converted into equity shares within a certain time frame. 

6. Non-Convertible Preference Shares: Non-convertible shares are those that cannot be converted into equity shares.