There is great difference between preference shares and equity shares in terms of characteristics and conditions. Preference shares have the characteristics of equity as well as debt instrument. On the other hand, equity shares only represent ownership in the company. Some of the basic differences between preferred and equity shares are given below:

Difference Between Preference and Equity Share

       Distinction Basis           Preference Share                  Equity Share

Preference Right of Dividend Payout

Preference dividend is paid before the equity dividend amount.Payment of equity dividend amount does not have the priority over the payment of the preference dividend.

Preference Right of Repayment of Capital Amount

Preference share has the priority of capital repayment over the equity share capital.