Preference shares example sentences

When the earnings of the organisation are not stable, fixed charged funds like preference shares and debentures should be carefully selected as these add to the financial burden of the organisation.Preference shares are not suitable for those investors who are willing to take risk and are interested in higher returns.Thus, preference shares have some characteristics of both equity shares and debentures.Thus, the preference shares can be participating and non-participating.Preference shares provide reasonably steady income in the form of fixed rate of return and safety of investment.Preference shares are useful for those investors who want fixed rate of return with comparatively low risk.A company can issue different types of preference shares.equity shares and preference shares, according to the provisions of The Companies Act, 195 Preference shares again are of different types based on varying shades of rights attached to them.For example, while the dividend on preference shares is not tax deductible, interest paid on debentures and loan is tax deductible and may, therefore, be preferred by organisations seeking tax advantage.A company can issue different types of preference shares.For example, preference shares of a company acquired shortly before their specific redemption date, provided there is only insignificant risk of failure of the company to repay the amount at maturity.As per Section 86 of The Companies Act, a company can issue two types of shares (1) preference shares, and (2) equity shares (also called ordinary shares).Payment of fixed rate of dividend to preference shares may enable a company to declare higher rates of dividend for the equity shareholders in good times.In this context, earnings refer to profit available for equity shareholders which is worked out as Profit after Tax Dividend on Preference Shares.The rate of dividend on preference shares is generally higher than the rate of interest on debentures.