What's the different between preference shares and ordinary shares?
Preference shares, also known as preferred shares, have the advantage of a higher priority claim to the assets of a corporation in case of insolvency and receive a fixed dividend distribution. These shares often do not have voting rights and can generally be converted into ordinary shares.
In the event of bankruptcy or liquidation, preference shares are paid according to their par value only after payments are made to outstanding debt holders. Preference shareholders receive payment prior to ordinary shareholders.
In contrast, ordinary shares have a lower priority for company assets (in the event of liquidation) and only receive dividends at the discretion of the company (ie. where dividends are declared). However, ordinary shareholders have a right to vote and are generally entitled to one vote per share.