What happens to a company when it issues preference shares?

Question

What are preference shares basically? Google tells me its for companies to accept large funding from invests, but I want to know how exactly it works in simple terms.

There is this company whose shares I own, a while ago there declared a dividend and said to consider a bonus in future meeting, that meeting is yet to happen.

Now in between they have issued preferential shares to a company to allow an investment of 11M $ or so at a fixed price. Also that same investment firm has bought some shares from the open market too.

Meanwhile the price of the stock has gone really up in two days.

What can be expected off the company in near future? Will the price go up or down? Will they still declare a bonus?

Answer 1

In most cases , preferential sharesholders are paid dividends first before common shareholders are paid . In the event of a company bankruptcy , preferential shareholders have the right to be paid first before common shareholders. In exchange for these benefits , preferential shareholders do not have any voting rights.

The issuing of preferential shares has no impact on share prices or issuing of bonuses , it is a mere coincidence that the stock price went up