Types of Shares

There are mainly two types of shares:

1. Equity shares : Equity Share means that part of the share capital of the company which are not preference shares.

2. Preference Shares: Preference Shares means shares which fulfill the following 2 conditions. 

i) It carries Preferential rights in respect of Dividend at fixed amount or at fixed rate i.e. dividend payable is payable on fixed figure or percent and this dividend must paid before the holders of the equity shares can be paid dividend.

ii) It also carries preferential rights in regard to payment of capital on winding up or otherwise. It means the amount paid on preference share must be paid back to preference shareholders before anything is paid to the equity shareholders. i.e. Preference share capital has priority both in repayment of dividend as well as capital.