Preference share

In general, a share which ranks ahead of other shares as to dividends or capital (or both) but which carries limited voting rights. Preference shares are usually fixed-income shares that do not participate in the success of the company. Consequently, they are considered to be a less risky form of investment than ordinary shares. The exact nature of preference shares and the rights attaching to them are usually set out in the company's articles of association.

For more information on preference shares, including the reasons for issuing preference shares and the rights attaching to them, see Practice note, Preference shares.