What is Preference Capital
It represents a hybrid form of financing it par takes some characteristics of equity and some attributes of debentures. It resembles equity in the following ways
1. Preference dividend is payable only out of distributable profits.
2. Preference dividend is not an obligatory payment.
3. Preference dividend is not a tax –deductible payment.
Preference capital is similar to debentures in several ways.
1. The dividend rate of Preference Capital is fixed.
2. Preference Capital is redeemable in nature.
3. Preference Shareholders do not normally enjoy the right to vote
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