I n t e r a c t I v e t e X t foundations in Accountancy/ acca financial accounting (ffa/FA) bpp learning Media is an acca approved Content Provider

shares and ordinary shares. 

2.3.1 Preference shares 

Preference shares 

are shares which confer certain preferential rights on their holder.  

 

Preference shares carry the right to a final dividend which is expressed as a percentage of their par 

value: eg a 6% $1 preference share carries a right to an annual dividend of 6c. Preference dividends 

have priority over ordinary dividends. In other words, if the managers of a company wish to pay a 

dividend (which they are not obliged to do) they must pay any preference dividend first. Otherwise, 

no ordinary dividend may be paid. 

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