Definition: Preference shares allow an investor to own a stake at the issuing company with a condition that whenever the company decides to pay dividends, the holders of the preference shares will be the first to be paid.

Description: Dividend payment of the preference shareholders is fixed and if somehow company liquefies, the owners of the preference shares will be the first one to get their money back after the company has paid back its debt.

There are different kind of preference shares available, such as cumulative and non cumulative preference shares, redeemable and non-redeemable preference shares, convertible and non-convertible preference shares, participating and non participating preference shares.