Looking for What is the difference between preference shares and equity shares as per the syllabus of class 12 CBSE, ISC, and state Board.
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Distinction between Preference Shares and Equity Shares (Class 12)
Preference Shares vs Equity Shares
|Basis of Distinction||Preference Shares||Equity Shares|
|Rate of Dividend||Preference shares are paid dividends at a fixed rate.||The rate of dividend on equity shares is not fixed. It may vary from year to year depending upon the availability of profits.|
|Arrears of Dividend||If the dividend is not paid on these shares in any year, the arrears of the dividend may accumulate.||In the case of equity shares, dividends can not accumulate.|
|Preferential right as to the payment of dividend||They have a right to receive dividends before any dividend is paid on equity shares.||Payment of dividend on equity shares is made after the payment of preference dividend.|
|Preferential right as to the payment of capital||They have a right to return capital in the case of winding up before any capital is returned to equity shareholders.||Equity share capital is paid only when preference share capital is paid out fully.|
|Voting rights||Preference shareholders do not have any voting rights.||Equity shareholders enjoy voting rights.|
|Right to participate in management||They do not have a right to participate in the management of the company.||They have the full right to participate in the management of the company.|