Preference shares, their canons of construction and their similarities with debentures : a comparative analysis

Abstract

In this term paper, a legal comparison is created between the United Kingdom and Malta in order to examine in contrast certain aspects dealing with preference shares and shareholders’ rights. In the first section, the aim is to bring out the differences, if any, with regards to the variation in class rights of particular categories of shareholders, with an intention to bring out various methods of shareholder protection in cases of unfair prejudice. Furthermore, the second section will focus mainly on the Canons of Construction, as devised by the courts in the United Kingdom, which help with the establishment of preference shares and preference shareholders’ rights. The Maltese Companies Act does not shift its focus completely to this particular aspect, and therefore, it is recommended to implement these rules into Maltese law and have the Maltese courts resort to them as guidelines. Consequently, similarities are brought out with respect to preference shares and debentures. This will provide further insight into methods of company finance, particularly equity and debt finance, which will be considered advantageous for companies to evaluate and choose which method will function as the best option.