Answers:
Common or Equity Shares: smaller units called ‘shares’ or
‘common shares’. This allows a company to obtain funds from several owners, who
are called ‘shareholders’ or ‘members’.
However, a private company can issue
shares only privately through friends and relatives but a public company can
issue shares to the public.
Preference Shares
Preference shares are also ownership
shares but with a difference. Preference shareholders enjoy preferential rights
over the rights of equity shareholders.
They have a right to get dividends
(subject to an upper limit specified in the issue document) before any dividend
is paid to the equity shareholders. They also have a right to get their money
back before anything is paid back to the equity shareholders in the event of
winding up of the business and if there is a surplus of proceeds after paying
all the liabilities of the company.
Deferred Shares
Deferred shares are the type of
ownership security that offers a more proportionate right of voting. The owner
of one deferred share can have more than one vote, depending upon the terms of
issue. In exchange of these extraordinary voting rights, the deferred
shareholders’ right to get dividend is deferred until a specified amount of
dividend is paid to the equity shareholders.
Subsidy and Tax Incentives
The central government and state governments
offer incentives for investment through subsidies, tax incentives and concessions
in land and utility prices. Schemes vary from state to state. Usually, subsidy
and tax incentives are offered for encouraging small entrepreneurs, women
entrepreneurs and for encouraging investment in desired locations and businesse