A measurement of ownership in a company. Every share gives a right to company’s profit or loss. Shares have different participative rights and may rank differently in preference when a company undergoes liquidation. Shares which rank higher than ordinary shares are called preference shares.
Preference shares have higher ranking when a company is liquidated in terms of getting the remaining assets of the company and normally is issued at a higher price compared with an ordinary share which is ranked last for capital return in case of winding up.