Preference Shares

Shares which attract a fixed annual dividend which must be paid before any dividends are declared on other classes of share (such as Preferred Shares and Ordinary Shares). Preference Shares also rank ahead of other share classes on a return of share capital and are generally redeemed (paid back) after a number of years. Preference Shares do not otherwise participate in the success of the company and also have very limited voting rights. They are a less risky investment than other classes of share and sit between debt and true Equity (even though they appear on a Company’s Balance Sheet as Equity).