Page 165 - Corporate Finance PDF Final new link

BRILLIANT’S Long Term Financing and Valuation of Goodwill & Shares 165

(b) Preferential Share (b) {à’$a|{e¶b eo¶a
Preferential shares mean those shares {à’$a|{e¶b eo¶a go Ame` CZ eo¶g© go h¡ {OÝh|
which enjoy special preferences over equity Bp³dQ>r eo¶a H$s VwcZm _| Hw$N> ñnoeb {à’$a|g àmßV hmoVo
shares. While issuing shares, company declares h¢Ÿ& H$ånZr O~ eo¶a H$m Bí¶y H$aVr h¡ V^r Bg ~mV H$s
whether these shares are equity or preferen- KmofUm H$a XoVr h¡ {H$ Omo eo¶g© Bí¶y {H$`o Om aho h¢ do
tial. If any shareholder takes preferential shares Bp³dQ>r eo¶a h¢ `m {à’$a|{e¶b eo¶a h¢Ÿ& `{X H$moB© eo¶ahmoëS>a
then he/she enjoys special preferences over eq- H$ånZr Ho$ {à’$a|{e¶b eo¶a coVm h¡ Vmo Cgo Bp³dQ>r eo¶ahmoëS>g©
uity shareholders. H$s VwcZm _| _w»`V: Xmo {deof nydm©{YH$ma àmßV hmoVo h¢:
For example: CXmhaU Ho$ {bE…
1. They have preferential right to be paid 1. H$ånZr Ho$ cm^m| _| go [à’$a|{e¶b eo¶ahmoëS>g© H$mo
dividend over equity shareholders; and {S>{dS>oÝS> nhco {X`m OmVm h¡, CgHo$ níMmV Bp³dQ>r
eo¶ahmoëS>g© H$m H«$_ hmoVm h¡; VWm
2. They have preferential right to the return 2. H$ånZr Ho$ g_mnZ H$s Xem _| {à’$a|{e¶b eo¶ahmoëS>g©
of capital when the company goes into H$mo CZH$s H¡${nQ>b àmßV H$aZo H$m ^r nydm©{YH$ma
liquidation. NPP hmoVm h¡Ÿ&
Characteristics of Preferential Shares {à’$a|{e¶b eo¶g© H$s {deofVmE± `m A{YH$ma
Following are the characteristics of pref- {à’$a|{e¶b eo¶g© H$s à_wI {deofVmE§ {ZåZ{c{IV h¢…
erential shares:
1. Fixed dividend: Rate of dividend is de- 1. {ZpíMV {S>{dS>oÝS>: O~ {à’$a|{e¶b eo¶g© Bí¶y
clared at the time of issuing preferential shares. {H$`o OmVo h¢ Vmo Bí¶y Ho$ g_` hr CZ na {X`o OmZo dmco
Shareholders are entitled to receive dividend {S>{dS>oÝS> aoQ> H$s KmofUm H$a Xr OmVr h¡Ÿ& BÝh| à{Vdf© Cgr Xa
every year at the same rate.
go EH$ {ZpíMV {S>{dS>oÝS> àmßV H$aZo H$m A{YH$ma hmoVm h¡Ÿ&
2. Preferential right in dividend: Prefer- 2. {S{dS>oÝS> _| nydm©{YH$ma: {à’$a|{e¶b eo¶ahmoëS>g©
ential shareholders have preferential right to H$mo H$ånZr Ho$ cm^ _| go AnZm {hñgm àmßV H$aZo H$m
get their portion from company's profit. In nydm©{YH$ma hmoVm h¡Ÿ& Xygao eãXm| _|, O~ df© Ho$ AÝV _|
other words, when company declares dividend H$ånZr {S>{dS>oÝS H$s KmofUm H$aVr h¡ Vmo nhco {à’$a|{e¶b
at the end of the year, the preferential share-
eo¶ahmoëS>g© H$mo CZH$m {ZpíMV {S>{dS>oÝS
holders are to be paid first. If profit
Characteristics of {X`m OmVm h¡Ÿ& CgHo$ níMmV² `{X cm^
remains, then only equity share-
Preferential Shares ~MVm h¡ Vmo hr Bp³dQ>r eo¶ahmoëS>g© H$mo
holders get their profit.
1. Fixed dividend {X`m Om`oJmŸ&
3. Preferential right at the 2. Preferential right in 3. g_mnZ Ho$ g_` nydm©{YH$ma:
time of winding-up: At the time dividend O~ H$ånZr H$m g_mnZ hmoVm h¡ Vmo g^r
of winding up, a company first 3. Preferential right at ~mhar F$UXmVmAm| H$mo ^wJVmZ H$aZo Ho$
pays back to borrowers after that the time of winding - níMmV² eof ~Mr hþB© gån{Îm`m| H$m Cn`moJ
remaining assets are used for re- up H$ånZr AnZo eo¶ahmoëS>g© H$mo ^wJVmZ
payment to its shareholders. In 4. Voting rights
that case, preferential sharehold- 5. Get portion in sur- H$aZo _| H$aVr h¡Ÿ& Eogr Xem _|,
ers are paid back over equity plus profit {à’$a|{e¶b eo¶ahmoëS>g© H$mo Bp³dQ>r