Shares in a company which usually receive a fixed dividend each year and which, if redeemed, are redeemed at par value. Although the dividend ( dividends) is fixed, it is not guaranteed. However, if the company fails to pay ('passes') the preference dividend it will not be allowed to pay an ordinary dividend for the year to ordinary shareholders. Where the preference shares are cumulative, any arrears of preference dividend will also have to be paid prior to the ordinary dividend being paid in any year. Preference shares may be redeemable, when they will be redeemed at a set date. They may also be convertible. Finally, they may be participating, which means that in addition to the fixed dividend, they will receive a variable dividend dependent on the performance of the company. Dresdner Kleinwort Wasserstein financial glossary
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See preferred shares Euroclear Clearing and Settlement glossary
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These are normally fixed-income shares whose shareholders have the right to receive dividends before ordinary shareholders would rank above ordinary shareholders for the repayment of their investment in the company. London Stock Exchange Glossary
Financial and business terms. 2012.