The following are the differences between Equity Shares and Preference Shares
| Equity Shares |
Preference Shares |
| 1. The company is under no obligation to pay the dividend to the equity shareholders. |
1. The preferred shareholders get priority over the payment of the dividend at a fixed rate before any dividend is paid to the equity shareholders. |
| 2. Rate of dividend varies based on profits earned by the company. |
2. Rate of dividend is fixed. |
| 3. The arrears of dividend can not be accumulated. |
3. They have the option to accumulate or not to accumulate the dividend. |
| 4. They have the right to participate in management. |
4. The preference shares have the option either to participate or not to participate. |
| 5. Equity shares can never be converted. |
5. Preference shares have the option to either get converted or to stay not converted. |
| 6. Equity shareholders are the true risk. bearers. |
6. Risk is very low as compared to the equity shareholders. |
