Distinguish between equity shares and preference shares.

 EQUITY SHARES

Meaning - Equity shares are the ordinary shares of the company representing the part ownership of the shareholder in the company

Payment of dividend - The dividend is paid after the payment of all liabilities.

Repayment of capital - In the event of the winding-up of the company, equity shares are repaid at the end.

Rate of dividend - Fluctuating

Redemption - NO

Voting rights - Equity shares carry voting rights

PREFERENCE SHARES

Meaning - Preference shares are the shares that carry preferential rights on the matters of payment of dividends and repayment of capital

Payment of dividend - Priority in payment of dividend over equity shareholders

Repayment of capital - In the event of the winding up of the company, preference shares are repaid before equity shares.

Rate of dividend - Fixed

Redemption - YES

Voting rights - Normally, preference shares do not carry voting rights. However, in special circumstances, they get voting rights.

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