Corporate Accounts - Meaning of Shares, types of shares and difference between Preference Share and Equity Share

CORPORATE ACCOUNTS

MEANING OF SHARES AND TYPES OF
SHARES

Meaning of shares

The total capital of the company is divided into
units of small denominations. These
denominations are actually called shares.

Types of Shares

1.Preference Share
It can be easily understood with the word
“preference”. The Preference shareholders
get dividend before equity shareholders as
well as capital repayment.

2.Equity Share
Shares other than preference shares are
known as equity shares. Equity
shareholders are known as the owners of
the company.

, Preference Shares

It consists of main two elements which are
getting divided before equity shareholders
as well as the repayment of capital.

Important points of Preference Share

● Dividend payment is fixed whether there is
loss or profit.
● Dividend rate is also fixed.

Types of Preference Share

1.Cumulative Preference Share

● The dividend is cumulative.
● The dividend is collected every year and is
paid collectively when available.

2.Non Cumulative Preference Share

● In this type of preference share, the dividend
is not cumulated.