Difference between Equity Share and Preference Share

Basis Of Differentiation	Equity Shares	Preference Shares
Definition	Also known as ordinary shares. Equity share is the foundation of the company as it raises fund. These cannot be converted to preference shares	Preference shares are the shares which promise the holder a preference over the equity shares. These can be converted to equity shares
Dividend	Equity shares do not have right to receive dividend Under this the rate of dividend is fluctuating	Under preference shares, based on time, cumulative or non-cumulative are entitled for the dividend Here, the rate of dividend is fixed
Voting rights	Voting rights under general meeting	Do not have any voting rights
Types	These are considered as ordinary shares and thus they do not have any types	These come in various types like: Convertible and non-convertible Cumulative and non cumulative Non participatory, etc.
Liquidation	During liquidation, shareholders will have residual right over the asset even after the repayment to preference shares of the company	The shareholders will have first right after the repayment
Participation rights	They are primarily responsible for the management of the company	Do not have any participation rights in the company's management