Cumulative Preference Shares

Cumulative Preference Shares are not Ordinary shares but in fact are another form of borrowing as far as the company issuing them is concerned.

For you the investor these shareholders not only have a preferential right to receive a fixed dividend ahead of the dividend rights of any ordinary shareholder but also have the rights to any arrears ofpreference dividends. Its not quite like being a secured creditor but its close.

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2009-02-17 00:00:00 © Moneyextra.com