Two rights of preferred stock:
(1) Priority distribution right. When the company distributes profits, shareholders holding preferred shares have priority over shareholders holding common shares, but enjoy a fixed amount of dividends, that is, the dividends of preferred shares are relatively fixed.
(2) Priority creditor's rights. If the company is liquidated, the remaining property is distributed, and the preferred stock is distributed before the common stock.
Note: When the company decides not to distribute dividends for several consecutive years, the preferred shareholders can enter the shareholders' meeting to express their opinions and safeguard their rights.
Extended data:
There are three ways to recover preferred shares:
(1) Premium mode: Although the company redeems the preferred shares at a predetermined price, it often brings inconvenience to investors, so the issuing company often adds a "premium" to the face value of the preferred shares.
(2) When the company issues preferred shares, it proposes to set up a "sinking fund" with part of the funds obtained, which is specially used to redeem part of the issued preferred shares on a regular basis.
(3) Conversion method: that is, preferred shares can be converted into common shares according to regulations. Although convertible preferred stock itself constitutes a kind of preferred stock, it is often regarded as a feasible way to recover preferred stock in foreign investment circles, but the initiative of this recovery lies with investors rather than companies. For investors, it is very beneficial to do so when the price of the common stock market rises.
Baidu Encyclopedia-Preferred Stock