Preference shares as the name suggest have prior claim to profit than ordinary shares.
Preference shares are not nowadays a very popular source of finance because of the tax disadvantage compared with debt finance.
This will be discussed later in this book. A preference shareholder is entitled to dividend of up to a stated maximum amount before any dividend is paid to ordinary shareholders.
Dividend rights may be cummulative or non cummulative. Dividends are cummulative when the rights are paid in the subsequent year if not paid in the year of entitlement.
Non cummulative dividend right lapses if not paid in the year it is due. In the event of winding up, any surplus asset after prior claims (e.g. creditors and lenders) have been met, must first be used to repay up to the full nominal value of the preference shares.
Only after this may the ordinary shareholders participate. Preference shares may be redeemable.
This means that their capital value may be repaid. Company law requires that this be either out of profit appropriated for the purpose or out of the proceeds of a special issue of new shares.
The right of preference shares will not normally be varied after the shares have been issued. Thus an issue of bonus preference shares would not be made to preference shareholders as can be made to ordinary shares.
Reserves
There are two categories of reserves. Capital reserve and Revenue reserve. Capital reserve arises as a result of paper transaction such as capital redemption reserve fund created out of existing revenue reserve on the redemption of redeemable preference shares. Another example is the reserve arising from revaluation of property.
.Revenue reserve arises from a genuine inflow of cash which can be used for bonus shares.
Loan capital
These are normally represented by fixed interest securities.
The holders can buy and sell them in the stock market and they receive their income in the form of regular payments called interest. Loan capital has nominal value often in form of stock rather than share units. The nominal value often form the market price.
The certificate given by a business corporation, etc. as a receipt for money lent at a fixed rate of interest until the principal is repaid is known as debenture.
The distinguishing features of loan capital are: (a) The income received by the debenture holder is a charge against revenue and is not a share of ascertained profit.
The implication of this is that a fixed interest is payable in full whether profits are available or not (b) The capital value of the loan..
may be repaid (depending on the term of issue) although irredeemable loan stock are sometimes issued.
A company is sometimes empowered to reduce its indebtedness by purchasing its own loan stock in the market. It would be illegal for it to purchase its own shares of the business.
. (C) There is security for the interest and capital. This arises primarily from the contract between the company and the lender.
Source
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No doubt you have knowledge about this, particularly I must say that my knowledge in these things is not so deep, in fact it is very basic, I understand why large employers should always have trusted lawyers who are experts in these matters.Hello @mandate
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!hw ban
Mass recycled post fraud.
Previous posts edited out to cover up the scam.
Banned @mandate.
You mean that this post consists of a re-publication?
Could you please provide me with the link to the previous publication?
I would really appreciate it.Hello dear @hivewatcher.
Other abusive posts:
https://hive.blog/hive-175254/@mandate/deferred-tax-payment https://hive.blog/hive-175254/@mandate/attitude-of-federal-and-state-governments-to-investments https://hive.blog/hive-175254/@mandate/over-and-under-capitalisation https://hive.blog/hive-175254/@mandate/capital-debt-qgqvuc
I would also like to thank you for spotting it @hivewatcher
It's very unfortunate and I can only hope that @mandate will learn his lesson. For the time being project.hope won't be able to support his content on hive and definetly we will pay more attention to his work.
Thank you very much.
I'll investigate it.
Could you give us a little explanation about hivewatchers says?Hi, dear @mandate.
Yes. I reposted an article I have once Posted before on the hive blockchain
Thanks for responding.
This really is not a serious offense, if you are doing it for the first time.
The problem here is that Hivewatcher accuses you of having deleted the original article and of continually doing.
With this, you are showing us a dishonest action where you try to hide your fault. You would be acting premeditated.
Which leads me to wonder if we would be doing well to continue supporting your work at PH, since what you do is a type of plagiarism.
I must also ask myself, since when have you been taking these actions?
I'll have to put your situation under observation.
@crypto.piotr
Yes. That was the mistake I made.
Yea that was the mistake I made, I feel since it was my post created by myself before, I can just repost it again for those that might not see it before when I posted it earlier back then and I can just edit that other previous ones I have posted
I have now realize that it was a mistake, a fault from my side and a great offense which I want to use this medium to apologise to the project hope community and team for that reason.
I am sorry for that.