Why should preferred shares be issued and why should companies issue preferred shares?

I'd love to know the answer to that question as well.

Compared with common shares, preferred shares have priority over common shares mainly in terms of the power to distribute profits and residual property. So why do listed companies issue preferred shares?

The impact of the STAR Market on A-shares in 2016.

1. Why does the company issue preferred shares?

1. Light financial burden. Since the preferential dividend is not a statutory debt that the issuing company must pay, such dividends can be withheld if the company's financial situation deteriorates, thus reducing the financial burden on the company.

2. Be financially flexible. Since there is no final maturity date specified for the preferred**, it is essentially a perpetual borrowing. The recovery of priority ** is determined by the enterprise, and the enterprise can take back the priority ** under favorable conditions, which has greater flexibility.

3. Low financial risk. Since preferred shares belong to the company's equity capital from the perspective of creditors, they consolidate the company's financial position and improve the company's ability to borrow, therefore, the financial risk is small.

4. Do not reduce the expected annualized expected income and control of the ordinary. Compared with ordinary **, the expected annualized expected return per share of the preferred ** is fixed, and as long as the expected annualized expected return on the net assets of the enterprise is higher than the preferred ** cost rate, the expected annualized expected return per share of the ordinary ** will rise; In addition, the preferential ** has no voting rights and, therefore, does not affect the control of the common shareholders over the enterprise.

Summary. The value of preferred shares typically does not fluctuate as much as common stock. This, combined with a planned dividend on preferred stock, sometimes results in a company issuing preferred stock on top of the issuance of common stock or bonds.

Hello dear<>

As to why companies issue preferred shares, their purpose is to use it as a way to raise capital to run their business or invest in new projects that they believe will drive future growth. Companies are sometimes attracted to the issuance of preferred stock for a number of different reasons than other types of **.

And the term of preferred shares may be shorter than the maturity of bonds, which means that the term of the certificate of ownership of preferred shareholders tends to be shorter than the maturity of bonds.

The value of preferred shares typically does not fluctuate as much as common stock. This, combined with a planned dividend on preferred stock, sometimes results in a company issuing preferred stock on top of the issuance of common stock or bonds.

It can also reduce the burden of debt, and if a company is unable to repay its bonds, the company may be at risk of defaulting on its bonds and therefore facing bankruptcy. In contrast, companies that issue preferred shares can defer dividend payments, which gives them more flexibility to pay dividends when they have cash.

Kiss understands.

A preference share issuance is an external issuance of preference shares of the company.

Preferred shares refer to other types of shares other than the ordinary types of shares that are generally stipulated in the Company Law, and the holders of the shares have priority over the ordinary shareholders in the distribution of the company's profits and surplus property, but the rights to participate in the company's decision-making and management are restricted.

Preferred shares are not allowed to issue preferred shares with different priorities in terms of dividend distribution and distribution of residual property, but preferred shares with different settings on their terms are permitted.

The issuance of preferred shares is mainly to meet the conditions for issuance, and to issue them to the old Bank of China according to the relevant degree.

1. Issuance conditions: The company's issued preferred shares shall not exceed 50% of the total number of ordinary shares of the company, and the amount of funds raised shall not exceed 50% of the net assets before the issuance, and the preferred shares that have been repurchased and converted shall not be included in the calculation.

2. Public offering: If the company publicly issues preferred shares, the following matters shall be stipulated in the articles of association:

1. Adopt a fixed dividend rate, 2. Dividends must be distributed to preferred shareholders in the case of distributable after-tax profits, 3. The difference in dividends that have not been paid in full to preferred shareholders shall be accumulated to the next fiscal year, 4. After the shareholders of preferred shares distribute dividends according to the agreed dividend rate, they will no longer participate in the distribution of residual profits together with ordinary shareholders.

The issuance of preferred shares is mainly issued according to the relevant degree if the conditions for issuance are met.

1. Issuance conditions: The company's issued preferred shares shall not exceed 50% of the total number of ordinary shares of the company, and the amount of funds raised shall not exceed the net assets before the issuance.

50% of the preferred shares that have been repurchased and converted are not included in the calculation.

2. Public offering: If a company publicly issues preferred shares, it shall be listed in the articles of association.

stipulates the following:

1. Adopt a fixed dividend yield.

2. Dividends must be distributed to preferred shareholders in the case of distributable after-tax profits, 3. The difference in dividends that have not been paid in full to preferred shareholders shall be accumulated in the next year, 4. After the preferred shareholders distribute dividends according to the agreed dividend rate, they will no longer participate in the distribution of remaining profits together with the shareholders of Pusong Litong shares.

1. Under what circumstances can preference shares not be issued?

The issuer shall not issue preferred shares under any of the following circumstances:

1) There are false records, misleading statements or material omissions in the application documents for this issuance;

2) Have been subject to administrative penalties by the China Securities Regulatory Commission in the past 12 months;

3) The case is being investigated by the judicial authorities for suspected crimes or is being investigated by the China Securities Regulatory Commission for suspected violations of laws and regulations;

4) the rights and interests of the issuer have been seriously damaged by the controlling shareholder or actual controller and have not been eliminated;

5) The issuer and its subsidiaries have provided external guarantees in violation of regulations and have not been released;

6) There are guarantees, litigations, arbitrations, major market challenges or other major matters that may seriously affect the company's continuing operations;

7) Its directors and senior managers do not meet the qualifications stipulated by laws, administrative regulations and rules;

8) Other circumstances that seriously harm the legitimate rights and interests of investors and the public interest.

2. What are the conditions for the issuer to meet for the issuance of preferred shares in the sale of oranges?

The issuer shall issue preferred shares to qualified investors who meet the requirements of Article 65 of the Measures for the Administration of Preferred Shares. The number of issuers shall not exceed 200 at any time, and the cumulative number of issuers holding the same terms and conditions shall not exceed 200.

Article 65 of the Measures for the Administration of the Pilot Program of Preferred Shares: The term "qualified investors" in these Measures include:

1) Financial institutions established with the approval of the relevant financial regulatory authorities, including commercial banks, ** companies, ** management companies, trust companies and insurance companies, etc.;

2) Wealth management products issued by the above-mentioned financial institutions to investors, including but not limited to bank wealth management products, trust products, investment-linked insurance products, ** products, ** company asset management products, etc.;

3) An enterprise legal person with a total paid-in capital or paid-in share capital of not less than RMB 5 million;

4) Partnership with a total paid-in capital contribution of not less than RMB 5 million;

5) Qualified Foreign Institutional Investors.

QFII), RMB Qualified Foreign Institutional Investors.

RQFII), overseas strategic investors who meet the regulations of the relevant departments;

6) Except for the directors, senior management and spouses of the issuer, individual investors with total assets of various ** accounts, capital accounts and asset management accounts under their names shall not be less than RMB 5 million;

7) Other qualified investors approved by the China Securities Regulatory Commission.