Issue of Equity & Preference Shares

All about equity and Preference shares:​
Difference between equity shares and preference shares, procedure and our analysis
Equity Shares Preference shares
Voting Rights Equity Shares have voting rights and can vote on all major decisions Preference shareholders do not have voting rights
Preference for dividend The dividend is paid to equity shareholders only after paying the dividend to Preference shareholders They have first right over the dividend payments
Amount of dividend The dividend paid to equity shareholders depend on the profit earned. More profit means more dividend The dividend paid to preference shares is fixed irrespective of profit
Process to issue equity shares and preference shares Step 1: Increase the authorised share capital Step 2: Call the board meeting to approve the offer letters and send the same to the proposed investors Step 3: Call the EOGM to approve the offer Step 4: Get the offer letters signed by the investor and ask them to deposit the funds Step 5: Allot the shares to the investors and issue share certificates Process to issue preference shares is same as equity shares
Our Analysis:

Preference Shares are suited when issuing shares to angels and small investors. Equity shares are suited when issuing to institutional and big-ticket size investors.

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