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Q：
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What is company shares?
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A：
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Company shares are a type of security that indicates a shareholder’s ownership stake in a company. The two primary types of shares issued to shareholders are ordinary shares and preference shares.
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Q：
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Under what circumstances preference shares can be issued?
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A：
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The Constitution must permit the issuance of preference shares and clearly outline the rights and conditions associated with them, including issuance, conversion and redemption.
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Q：
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Is preference shares convertible?
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A：
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Preference shares can be issued with the right to convert them into ordinary shares at a specified time and rate in the future.
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Q：
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What are the advantages of issuing preference shares for the Company?
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A：
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Fixed dividend returns
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The preference share capital is excluded from the calculations for a company's eligibility for the SME preferential tax rate, providing tax structure flexibility.
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Expands the capital market.
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The company can raise funds without impacting or diluting the voting rights of existing ordinary shareholders, thereby maintaining their control over the company.
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Unlike bank loans that require interest payments, dividends are only paid from profits.
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Failure to pay dividends does not result in a charge on the company’s assets of the company, unlike bank loans.
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Q：
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What are limitations of preference shares?
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A：
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Preference shareholders are often not granted voting rights, except in matters that directly affect them, as specified in the Company’s Constitution.
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FAQ
