Sunday, July 25, 2010

Disadvantages of Issuing Preference Shares

The company will have to pay dividend if the company has made a profit

If the shares were issued as redeemable preference shares then the share capital should be repaid after a specific time period at which time there will be cash out flow.

The preference shareholders should be paid a return more than other forms of debit capitals so that they are compensated for taking a higher risk

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