In a joint stock company, preference shareholders are those who receive?
Answer Details
Preference shareholders in a joint stock company are those shareholders who receive a fixed rate of dividend and have the first claim on the net profits of the company before the ordinary shareholders. This means that they are entitled to receive their dividend before the ordinary shareholders and they will receive a fixed dividend amount regardless of whether the company makes a profit or not.
So, if the company is profitable, preference shareholders will receive their fixed dividend and they may also receive additional dividends if there is enough profit remaining after the ordinary shareholders have been paid. However, if the company is not profitable, preference shareholders will still receive their fixed dividend amount while ordinary shareholders may not receive any dividend.
Therefore, preference shareholders receive a more stable dividend income compared to ordinary shareholders who are subject to fluctuations in the company's profits.