If the parent company has provided the preference shareholders with a guarantee, it may be possible to recognise a minority interest.

But as the subsidiary has negative net assets, there would be no funds available on liquidation to pay the preference shareholders anything.

Only when senior creditors were paid in full would junior creditors, and after them preference shareholders, get some cash.

Junior creditors got just over half, and preference shareholders the rest - all at the expense of senior creditors.

Normally, however, ordinary shareholders expect lower yields than preference shareholders and loan stock holders because of their participation rights.

A preference shareholder does, however, usually have the right to be paid his dividend before any dividends can be paid to the ordinary shareholders.

Subordinated loan stock will rank behind all unsecured creditors but ahead of preference shareholders and ordinary shareholders.

The takeover resulted in the preference shareholders receiving 75% of the nominal value of their stock, the residue going to the ordinary shareholders.

Under chapter 11, two-thirds of creditors, of preference shareholders and of equity shareholders must separately back a deal before it can go ahead.

Where the company has preference share capital, the ABI requests that class meeting consent should be obtained from the preference shareholders.

This, so-called 'Spens formula,' affords reasonable protection in the case of listed companies but preference shareholders in unquoted companies still remain at risk.

The preference shareholders, including Scottish Insurance Corp Ltd complained that they should be able to share in the proceeds from liquidated assets.

The rights of the preference shareholders rank behind those of the provider of debt and the creditors, but before those of the ordinary shareholders.

Preference shareholders receive nothing on a liquidation until all creditors have been paid, although they will rank ahead of ordinary shareholders for a distribution in the winding up.

In advance of liquidation the company procured a special resolution for reduction of capital, whereby all paid up capital would be returned to preference shareholders, to settle any claims.

The danger to an investor would be if the investment trust's net asset value fell so much that it could not afford to meet its commitments to the zero dividend preference shareholders.

The Preference Shareholders took up 57,000 of the Ordinary Shares offered to them and the Ordinary Shareholders took up all of theirs.

The House of Lords held that preference shareholders had no right to share in surplus assets, so it could not be said that the scheme was not fair and equitable.

For example, a company might provide that preference shareholders shall each receive a cumulative preferred dividend of a certain amount per annum, but the ordinary shareholders shall receive everything else.

A small number of Shareholders reject the offer from IFE including Julian Tregar who was a holder to preference shareholder if TVS went in to liquidations.

Lord Macnaghten noted that preference shareholders 'must be treated as having all the rights of shareholders, except so far as they renounced these rights on their admission to the company.'

(a) because the rights of preference shareholders are subordinated to those of loan stock holders, preference shareholders normally expect a higher yield to reflect the difference in risk.

Unless preference shareholders are expressly granted participating rights they are unlikely to be entitled to share in any way in the 'equity' or to have voting rights except in narrowly prescribed circumstances.

A total of 33 million ordinary shares have been issued in respect of all the preference shares converted in the year and the register of preference shareholders finally closed on 1 July 1992.

A modification of the proprietary theory, known as the residual equity theory, defines the company in terms of the ordinary shareholders only; thus excluding the preference shareholders who would be considered owners under the proprietary theory.