Preference Share Capital or Quasi-Equity

It is also called quasi-equity because it combines features of equity and those of debt.  It is preference because it is preferred to ordinary share capital that is:

i)  It is paid asset proceeds first - preferred to assets.

ii) It is paid dividends first - preferred to dividend

Dissimilar ordinary share capital, such has a fixed return. It carries no voting rights. It is an unsafe finance and it increases the company's gearing ratio.