Adequate459:
Dear all,
Please what is the process of converting foreign loan to preference share
My company's board suggested we convert our foreign to preference share in order to reduce our liabilities.
Can you enlighten me on what is possible and how, please

rhames:


Preference Shareholders have first right to the entire assets of any organization. Where the company makes a profit, they are the first to be paid and when it makes a loss or liquidate they are first to recover their investments before any other shareholders such as the ordinary or equity Shareholders who bear the brunt of any of the two actions, profit, loss or liquidation.

Preference shares are interest bearing hence the power of right they enjoy.

Some examples are 5% Preference Shares means they enjoy annual interest of 5 % on their
original investments.

Preference shares can be deffered, interest can be paid later or convertible to ordinary shares.

The advantage of any company converting foreign loans to preference shares

One advantage of converting the loans to preference is suspension of paying huge interests in local and foreign currency.

The move will stabilise the operations of your organization.

The disadvantage is the foreign lenders may demand a seat on the organizations board to secure their investment and affect the company's decision making in the long term.

Oh thank you
Plz is it advisable to be domicile in forex or Nigeria currency