A preference share is a share in which the holder is generally not granted voting rights as a shareholder . In return, however, he receives the right to a preferential, usually higher dividend . Its counterpart is the common stock ; it is endowed with voting rights. In the case of the dividend, however, it will only be served if the claims of the preferred shareholders have been fully satisfied. In addition, preferred shares may have a higher rank in the event of a company liquidation.
From an investor's point of view, preference shares are particularly suitable for investors with purely financial interests who do not want to exercise control over a stock corporation . From a company perspective, preference shares are suitable for increasing the company's equity without having to give up control of the company in the form of voting rights. Preferred stocks are also suitable for bridging financial bottlenecks, as the preferred dividend can be paid back while the interest on a bond must always be paid on time.
German preference shares are as participative configured shares of Anglo American limited preferred stock to distinguish. After German Stock Corporation Act (AktG) have voting preference shares - grant the same rights as ordinary shares - with the exception of voting rights. Accordingly, a German preference share also participates in the pro rata balance sheet profit in addition to the statutory dividend preference . In contrast, limited preferred stocks do not participate in the pro rata balance sheet profit.. Section 1 of the
In Germany, the preferential preference for dividends in accordance with arrears until the arrears have been paid out in full.(1) AktG and (3) AktG is cumulative. This means that if a preferred dividend is not paid, payment must be made in arrears, unless the preferred shareholders agree to a waiver. To protect the preference shareholders, (2) AktG grants a special voting right if the payment of the preference dividend is 2 years in
Conversion of preferred shares into common shares
Preference shares can be converted into ordinary shares , provided the general meeting of a stock corporation approves this and the management board and supervisory board so resolve. Once approval has been given, German law also requires the explicit consent of the preferred shareholders in accordance with (3 ) AktG . The conversion can be mandatory or voluntary; In the event of a voluntary conversion, the holders of preference shares are usually offered the option of exchanging their preference shares for ordinary shares with voting rights, paying a conversion premium. This premium can be set in such a way that the shareholders are given a financial incentive to exchange them (i.e. the value of a preferred share is less than the common share plus the bonus received in return). In the case of a mandatory conversion, this is usually done without paying a premium.
Such a project is usually considered by companies when comparatively few preferred shares with low liquidity are traded and this class of shares is therefore to be withdrawn from the market entirely. Since stock indices such as the DAX have certain minimum requirements for the level of market capitalization and daily traded volumes of companies and these are considered per class of shares , the conversion also represents an opportunity to concentrate sales and capitalization on the ordinary shares and thus possibly jump into one to create desired index.
In Switzerland, in addition to preference shares (Art. 654/656 OR), which, unlike in Germany, like ordinary shares, also have voting rights, there are also participation certificates (Art. 656a ff OR) that have no voting rights (and also none Have priority).
- Conversion of preference shares into ordinary shares of Metro AG ( Memento of March 10, 2014 in the Internet Archive )
- Conversion of preference shares into ordinary shares of Hugo Boss AG ( Memento from June 22, 2012 in the Internet Archive )
- Code of Obligations Article 654