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What Is Preferred Stock?

2011/2/22 15:24:00 72

Limited by Share Ltd needs

preferred stock

Shareholders pay a fixed dividend, and preferred stock is actually a form of debt raising by the Limited by Share Ltd, but preferred stock.

It is also different from corporate bonds and bank loans. This is because the rights of the preferred shareholders to obtain profits and the assets of the company can only be exercised after the company meets the requirements of creditors.

Preferred shareholders can not ask for withdrawal of shares, but they can redeem them in accordance with the redemption provisions attached to the preferred shares.

Most preferred stock is accompanied by a redemption clause.

If the preferred stock is subdivided, it also includes: 1. Accumulation of preferred stock and non cumulative preferred stock.

Cumulative preferred stock is a dividend that can not be paid in the previous business year and can be paid together by the profits of the future financial year.

A non cumulative preferred stock is a preferred stock that can only be divided into dividends according to current profits. If the company fails to make a dividend, the dividends can not be accumulated and it can not be paid later.

(2) participate in the distribution of preferred stock and do not participate in the distribution of preferred stock.

Participating in the distribution of preferred stock means that the holders of their shares can not only share the fixed dividend of the year, but also have the right to participate in the distribution of preferred shares with common shareholders.

Without participating in the distribution of preferred stock, it is a preferred stock that can only be divided into fixed dividends instead of participating in other forms of dividends.

Convertible preferred stock and non convertible preferred stock.

None of the listed companies in China has issued preferred shares since the company law does not stipulate the relevant provisions of preferred stock.