Answer:
Ans. Differences between Equity shares and Preference shares are as follows:
Basis of Difference
Equity Shares
Preference Shares
1. Payment of dividend
Equity dividend is paid after paying the preference shares dividend.
Preference dividend are paid prior to equity shares dividend.
2. Refund of capital
Equity share is refunded only after refund of preference share capital.
Preference shareholder has prior right to refund the capital over equity capital.
3. Rate of dividend
Rate of dividend may over the year in equity shares.
Rate of dividend is fixed in preference shares.
4. Arrears of dividend
Dividend cannot be accumulated in equity share
Arrears of dividend may be accumulated in preference shares.
5. Convertibility
It is not convertible.
It is convertible.
6. Redeemability
It is not redeemable.
It is redeemable.
7. Voting Right
Every shareholder enjoys voting right on general meeting.
Preference shareholders have no such voting rights.
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