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shared preference share (Participating Preference Shares)

The company may, in its Articles, provide that even after paying a certain amount of dividend to the preference shareholders, if some profit remains, then the preference shareholders along with the equity shareholders shall share such remaining profits. So such preference share is called a shared preference share. Thus, the preferred preference shares are those which are entitled to share in the additional profits of the company after receiving the fixed dividend. Additional profit means the profit that remains after the distribution of dividends to all types of shareholders of the company as appropriate. Therefore, it is clear that the shareholder preference gets return on his capital in two forms – fixed dividend and (2) share in additional profit. In simple words, shared preference share means such preference share which has the right to get a share in the additional profits of the company along with a fixed rate of dividend.

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