(a) Provide steady income to shareholders.
(b) Fixed rate of return.
(c) Preferential right over other shareholders.
(d) No any sort of charge against the assets of the company.
Detailed Answer :
Merits of Preference shares :
(a) They don't create any charge on the assets of the company.
(b) They have the preferential right to repayment of capital over equity shareholders at the time of winding up of the company.
(c) Since the dividend payable to preference shareholders is fixed, therefore a company is in a position to declare high rates of dividend for equity shareholders during good times.
(d) They get steady income in the form of fixed rate of return and safety of investment from profitable business.
