Advantages of Preference Shares 1. If only equity shares are issued, the company cannot take the advantage of trading on equity.

Disadvantages of Equity Shares: 1. Absence of voting rights: The preference shareholders do not possess the voting rights in the personal matters of the company. 2. As a source of long-term finance, ordinary shares carry a number of advantages and disadvantages for a company. 1. There are certain advantages and disadvantages of preference shares from the company’s point of view. Accumulation of Dividend: The arrears of preference dividend accumulate in case of cumulative preference shares. There is thus no interference in general by the preference shareholders, even though they gain […] Preference shares are used by big corporate as a long-term source of funding their projects. It is important to analyze the benefits and disadvantages affixed with using preference shares as a medium of financing. Heavy Dividend: Usually, preference shares carry a higher rate of dividend than the rate of interest on debentures. They are known as hybrid financing instruments because they share attributes of both equity and debt. Equity shareholders have a right to vote on every resolution placed in the meeting and the voting rights shall be in proportion to the paid-up capital. 3. Benefits of equity share investment are dividend entitlement, capital gains, limited liability, control, claim over income and assets, right shares, bonus shares, liquidity etc. Disadvantages are dividend uncertainty, high risk, fluctuation in market price, limited control, residual claim etc. Disadvantages of Preference Shares . 2. Disadvantages of preference Shares.

As equity capital cannot be redeemed, there is a danger of over capitalisation. The following are some of the disadvantages of preference shares. The main disadvantage of owning preference shares is that the investors in these vehicles don't enjoy the same … Equity shareholders can put obstacles for management by …