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  • Hybrid Financing Instruments: Preference Share Capital

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    Shekhar Poojary T
    56 просмотров6 страниц
    Preference share capital is a hybrid financing instrument that combines characteristics of both equity and debt. It carries a fixed dividend rate like debt but ranks higher than equity in claims to income. While it typically lacks voting rights and claims to residual earnings like equity, dividends are paid from post-tax profits and depend on management discretion. Other hybrid instruments mentioned include convertible debentures/bonds, warrants, and options.

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    Hybrid Financing Instruments

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    Preference share capital is a hybrid financing instrument that combines characteristics of both equity and debt. It carries a fixed dividend rate like debt but ranks higher than equity in claims to income. While it typically lacks voting rights and claims to residual earnings like equity, dividends are paid from post-tax profits and depend on management discretion. Other hybrid instruments mentioned include convertible debentures/bonds, warrants, and options.

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    56 просмотров6 страниц

    Hybrid Financing Instruments: Preference Share Capital

    Загружено:

    Shekhar Poojary T
    Preference share capital is a hybrid financing instrument that combines characteristics of both equity and debt. It carries a fixed dividend rate like debt but ranks higher than equity in claims to income. While it typically lacks voting rights and claims to residual earnings like equity, dividends are paid from post-tax profits and depend on management discretion. Other hybrid instruments mentioned include convertible debentures/bonds, warrants, and options.

    Авторское право:

    Attribution Non-Commercial (BY-NC)
    Скачайте в формате PPTX, PDF, TXT или читайте онлайн в Scribd
    Отметить как неприемлемый контент
    из 6

    Hybrid Financing Instruments

    • Preference Share capital.

    • Convertible debenture/bonds.

    • Warrants.

    • Options.
    Preference Share Capital

    Preference share capital is a unique type of long


    -term financing in that it combines some of the
    features of equity as well as debenture.

    As a hybrid source of financing it is similar to


    debenture insofar;
    • It carries fixed rare of dividend.
    • It ranks higher than equity as claimant to the
    income.
    • It normally does not have any voting rights
    • It does not have share in residual earnings.

    It also partakes some of the attributes of Equity


    Capital namely:
    • Dividend paid after tax profit i.e. it is not tax
    deductable
    • Preference dividend payment depends on the
    discretion of management.
    • Irredeemable preference shares have no fixed
    maturity date .
    Features of Preference Shares:
    • Prior claim on income

    • Cumulative dividend

    • Redeem ability

    • Fixed Dividend
    • Convertibility

    • Voting Rights

    • Participation Features

    • Evaluation
    Thank U……………………,

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