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What are Preference Shares?

John Barnes Non Exec Director explains WHAT ARE PREFERENCE SHARES?¬† Preference shares are so called because they have ‘preference’ over ordinary shares for payment of dividends¬†and return of capital. However, they are junior to all forms of company debt, including debentures, loan notes and bank debt if the company is wound up. Key features Preference shares can be thought of as a hybrid between an ordinary share and a corporate bond. Their key features are:- Preference shareholders receive a fixed dividend, usually twice a year, similar to the interest (‘coupon’) paid on a bond; Dividends on preference shares are paid …Read More