Dividend Priority:

  • Preference shares receive dividends before common shares, ensuring that preference shareholders are paid first.

Fixed Dividend:

  • Preference shares typically offer a fixed dividend, providing consistent income, while common share dividends can vary based on the company's profitability.

Voting Rights:

  • Preference shares generally do not come with voting rights, unlike common shares, which often allow shareholders to vote on corporate matters.

Capital Repayment:

  • In case of liquidation, preference shareholders are paid before common shareholders but after debt holders, giving them a higher claim on the company's assets.

Accumulating dividends:

  • If the full preference dividend cannot be paid, the unpaid amount will accumulate and still be due in the future. Common shares do not offer this feature; if a dividend is not paid, it does not guarantee higher future dividends.

Voluntary redemptions:

  • For callable preference shares, the issuer has the option to redeem (or buy back) shares in the future. This is often done if the issuer can raise new capital at a lower cost. Common shares do not have this option.