Abstract
SUMMARY NON- VOTING PREFERRED STOCK Non-voting preferred stocks are shares of the company whose holders rank as non-voting owners with prior rights over ordinary stockholders in terms of the distribution of income or capital. The original attraction of non-voting preferred stocks to investors depended upon an inclination of many people to receive a regular dividend, usually affording a rate of return greater than that on fixed interest stocks, although with lesser security, but superior in this respect both in terms of income than that due to ordinary stockholders alone. Dividend is the amount of money that issuer has undertaken to pay to the holder. The sum is usually expressed as a percentage of the par value or amount of the par value. The payment of the preferred dividend is not a promise by the company, as in the case of a bond or debenture. It is subject to the discretion of the board of directors. In addition, there is no maturity date on which principal will be repaid. The preferred dividend is limited to a fixed amount, it must be paid before any payments can be made to common stockholders. In addition, although it can be omitted, when it is, no payment can be made to common stockholders. In liquidation, the claims of the non-voting preferred stockholders take precedence over those of the common stockholders. However, failure to make the preferred dividend payment does not result in bankruptcy as nonpayment of interest on bonds does.
