Preference shares:
The shares that get the first preference to obtain dividend and during liquidation the first right to get the capital back are called preference shares. Types:
(A) Preference shares redeemable before 20 years
(B) Preference shares redeemable after 20 years

Characteristics of preference shares:
1. Dividend:
Preference share-holders possess the right to obtain dividend that too at a fixed rate irrespective of the volume of profit.

2. Right to vote:
Generally, preference share-holders do not have voting rights except for matters related to their interests.

3. Preference:
Investors prefer to buy these shares because they get a fixed income and security for their capital.

4. Market price:
The price of these shares generally remains steady i.e. it neither increase nor decrease. Their prices may change only when the rate of interest changes in the market.

5. Proportion of risk:
The risk is quite less in preference shares because holders of these shares are first paid their capital back during liquidation of company.

6. Repayment of capital:
In case the company is wound up and its assets are sold, the money that comes n this sale is first given to the preference share-holders.