Preference shares

A form of capital with preferred rights over ordinary shares or common stock.

These rights may be a preferred right to a dividend or to repayment in the event of winding up of the business.

This form of capital has some characteristics both of debt and of equity. As such it is a form of hybrid instrument.

Preference shares are frequently used by venture capital investors as a medium for their investment.

Also known as 'preferred shares'.

See also

• An introduction to equity capital
• Common stock
• Hybrid
• Non-equity security
• Ordinary shares
• Preference
• Preference dividend
• Preferred stock
• Return on shareholders funds
• Share
• Tax shield
• Tier 1
• Venture capital
• Waterfall