The offering side should pay stamp duty of 0.1 percent of the selling, inheritance or bestowing of preference shares, Chinese authorities said on Tuesday.

The new policy was meant to "push forward the pilot program for preference shares in a proper and orderly manner," said a joint statement by the Ministry of Finance and State Administration of Taxation.

Starting from June 1, the duty is applicable to transactions of preference shares on the Shanghai Stock Exchange, Shenzhen Stock Exchange, and the National Equities Exchange and Quotation (NEEQ), it said.

Preference shares, along with common shares, are two primary types of stocks that companies offer to investors. Preference shareholders have priority rights over ordinary shareholders in distribution of profits and residual assets.

Unlike common shares, preference shares function more like a bond. They are rated by major credit-rating companies and their prices are affected by changes in interest rates.

In March this year, China's Securities Regulatory Commission (CSRC) announced new rules for the pilot program allowing eligible companies to issue preference shares. The shares are expected to add financing channels for Chinese companies to boost capital levels.

Issuance of preference shares in China was expected to kick off in the third quarter of this year, the China Securities Journal reported last week. Endi

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