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    Preference Shares

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    Alina

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    Preference Shares

    Uploaded by

    Alina
    9 views6 pages

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    Preference shares

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    Copyright:

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    Download as pptx, pdf, or txt
    9 views6 pages

    Preference Shares

    Uploaded by

    Alina

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 6

    Preference Shares

    Debt Securities
    G-Dated Securities
    Preference Shares
    • Preference shares : (not traded in stock exchange except Redeemable
    non-convertible Pref. Shares)
    • carry preferential rights: Fixed rate of dividend & as to repayment of
    capital at the time of winding up of the Company.
    • Generally preference shareholders do not have voting rights.
    • According to The Companies (Amendment) Act, 1988, the preference
    shares can be redeemable & the maximum period for which they can
    be issued is 10 years.
    Kinds of Preference Shares
    On the basis of cumulating of dividend :
    • Cumulative Preference Shares: They are those shares on which the
    dividend at a fixed rate goes on cumulating till it is all paid.
    • Non Cumulative Preference Shares: These are those shares on which
    the dividend does not accumulate.
    On the basis of participation :
    Participating Preference shares: Participate in surplus profits of the
    company & surplus assets during winding up.
    Non Participating Shares: These shares are not entitled to participate in
    surplus profit. Dividend at fixed rate is given.
    • On the basis of conversion :
    • Convertible preference shares: The owners of these shares have the option
    to convert their preference shares into equity shares as per the terms of
    issue.
    • Non-convertible preference shares: The owners of these shares do not have
    any right of converting their shares into equity shares.
    • On the basis of redemption:
    • Redeemable preference shares: These are to be purchased back by the
    company after a certain period as per the terms of issue.
    • Irredeemable preference shares: These are not to be purchased back by the
    company during its lifetime.
    • Note: See list of active preference shares in India (available in NSDL website)
    Debt Securities
    • Corporate Bond: Backed up by any collateral securities. (tradaded in
    stock exchanges)
    • Conventional Bond
    • Zero Coupon Bond
    • Perpetual Bond
    • Non-Conventional Bond
    • https://www.etmoney.com/mutual-funds/debt/corporate-bond/61
    • Corporate Debentures: Not backed up by any collateral
    • PSU Bonds: Issued by Public sector Units
    • https://www.indmoney.com/bonds/public-sector-bonds

    • Dated G- Secs: Treasury Bills, Gilt securities


    • Short term: 31 days, 90 days, 180 days, 365 days.
    • Dated G-securities: long term (5-10 years)
    • Risk free, interest rate slightly higher than Fixed Deposit.
    • Now, accessible to retail investors.
    August 2021, 250 crore

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