Deference between Participating Preference Share and non-participating preference shares

Posted on 02-04-2016        By ADMIN

Participating Preference Share and  

1.   Theholders of these shares,

 in addition to a fixed percentage of dividend, arealso entitled to participate 

in the surplus profits of the company along withthe equity shareholders.

 Only if there is a specific or special provision inthe articles of association 

of the company giving the holders of these sharesspecial rights to participate

 in the surplus profits. They are also entitled toparticipate in surplus assets of the company on its winding up.

2.   Non-ParticipatingPreference Share:Theholders of non-participating 

preference shares will get only a fixed rate ofdividend, of course, 

in the first instance (i.e., before any dividend is paidto equity shareholders).

 But they are not entitled to participate in thesurplus profits of the company.

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