What is PREFERENCE SHARES?

A term used in English law to designate a new issue of shares of stock in a company, which, to facilitate the disposal of them, are accorded a priority or preference over the original shares. Such shares entitle their holders to a preferential dividend, so that a holder of them is entitled to have the whole of his dividend (or so much thereof as represents the extent to which his shares are, by the constitution of the company, to be deemed preference shares) paid before any dividend is paid to the ordiuary shareholders. Mozley & Whitley.

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