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Types of Share Finance

The document provides a colorful table outlining the differences, advantages, and disadvantages of various types of shares: ordinary, preferred, deferred, right, and bonus shares. Each share type has unique characteristics, such as voting rights, dividend structures, and liquidation priorities, along with specific benefits and drawbacks. This summary aids in understanding the implications of each share type for investors and companies alike.

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Md Safayet Islam
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2 views1 page

Types of Share Finance

The document provides a colorful table outlining the differences, advantages, and disadvantages of various types of shares: ordinary, preferred, deferred, right, and bonus shares. Each share type has unique characteristics, such as voting rights, dividend structures, and liquidation priorities, along with specific benefits and drawbacks. This summary aids in understanding the implications of each share type for investors and companies alike.

Uploaded by

Md Safayet Islam
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Ordinary share,preferred share,deferred

share,right share,bonus share difference,


advantages and disadvantages in a colorful table
Here is a colorful table summarizing the differences, advantages, and disadvantages of
ordinary shares, preferred shares, deferred shares, right shares, and bonus shares:

Type of
Key Differences Advantages Disadvantages
Share

- Main type of shares in a - Voting rights in company


company decisions - Dividend not guaranteed
Ordinary - Holder has voting rights - Potential for capital - Lower priority in dividend
Share - Dividend varies with appreciation and asset distribution
profitability - Dividend participation - Higher risk
- Eligible for bonus shares - Limited liability

- Fixed or preferential
dividend - No voting rights
- Priority dividend payments
- Usually no voting rights - Dividend fixed, less
Preferred - Preference in liquidation
- Priority over ordinary shares capital gain potential
Share - Dividends often fixed and
in dividends and liquidation - Generally higher dividend
cumulative
- May be redeemable or rate cost to company
convertible

- Long waiting time for


- Last claim in liquidation
- Potential for large dividends dividends
- Usually held by insiders
Deferred after other obligations - Higher risk as last in
- May have vesting periods
Share - Used for long-term liquidation
- Paid dividends only after
compensation - Restrictions and vesting
others
periods

- Offered to existing
shareholders to raise new
capital - Allows shareholders to - Requires additional
- Offered at a discount on maintain ownership investment
Right Share market price percentage - Risk of dilution if not
- Shareholders can renounce - Opportunity to buy shares taken up
rights at discount - May cause cash outflow
- Requires payment to
subscribe

- Issued free to existing


- No immediate cash
shareholders
- Increase in shareholding benefit
- Issued out of free reserves
Bonus without investment - May lead to share price
or profits
Share - Signals company’s adjustment
- Proportional to existing
confidence and profitability - Dividend per share may
holdings
reduce
- No payment required

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