6 Major Differences between Preference and Equity Shareholders are as follows:
Preference Share:
1. The preference shareholders have no voting rights.
ADVERTISEMENTS:
2. The preference shares redeemable than equity shares.
3. Generally, dividend rate or amount is prefixed in case of preference shares.
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4. Firstly, the dividends on preference shares shall be paid.
5. The dividend rate is pre-fixed, and the income is guaranteed on them.
ADVERTISEMENTS:
6. In case of cumulative preference shares, the prefixed dividend shall be carried to the next year, if there are no profits in the current year
Equity Share:
1. The equity shareholders have voting rights.
2. The equity shares are the real risk-takers, and are the real sharers.
3. The dividend is not pre-fixed. It depends upon the availability of the profits after payment of dividends to preference shares and debentures.
ADVERTISEMENTS:
4. After paying the dividends to preference shares then only the dividends on equity shares shall be decided and paid, depending upon the availability of profits.
5. The dividend is not pre-fixed and the income is not guaranteed.
6. There is no such arrangement in equity shares. Dividends may be paid or not. If profits are made, then only the dividends are paid to equity shareholders, that to after payment of dividends to the preference shares.