ABSTRACT
PREFERENCE SHARE CAPITAL As we noted earlier, in nature preference shares come between ordinary shares and debt. Legally they form part of a company’s share capital, but with only limited rights to share in profits. Unlike lenders, who can enforce payment of interest, preference shareholders receive dividends only if the directors propose them. In practice, however, if there are profits, companies usually have little choice but to pay preference dividends. These are normally ‘cumulative’, which means that no ordinary dividends are possible until a company has paid all preference dividends due (including any arrears).
