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 can have some characteristics of debt and of equity. As such they could be 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

• Common stock
• Ordinary shares
• Preference dividend
• Return on shareholders funds
• Share
• Tier 1
• Venture capital