Question
What is meant by a ‘Share’? Give any two differences between ‘Preference Shares’ and ‘Equity Shares’.
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Answer
A company is an entity incorporated by a group of persons through the process of law and has a share capital divided into shares, the owners of which are referred to as members or shareholders. Share here refers to a unit into which the share capital of a company is divided. It includes the stock of the company and represents ownership claims on business.
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Basis of Difference
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Preference Shares
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Equity Shares
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Voting Rights
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Preference shareholders have voting rights only in special circumstances.
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Equity shareholders have voting rights in all the circumstances.
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Rate of Dividend
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Fixed rate of dividend is received.
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Rate of dividend is decided by the board every year and is approved by the shareholders.
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