Question

Give any four types of Preferences shares.

Answer 1

1. Non-Cumulative Preference Shares: Preference: Shares do not accumulate dividends in arrears. Non-cumulative preference shares provide dividends based on corporate profits in the current year. If a corporation does not produce a profit in a given year, shareholders do not get dividends and cannot claim dividends in subsequent years.
2. Cumulative Preference Shares: Cumulative preference shares allow shareholders to receive cumulative dividends even when the company is not profitable. Dividends will be paid in arrears during non-profit years and cumulatively in the following year when the company makes profits.
3. Redeemable Preference Shares: Redeemable preference shares allow the issuing business to repurchase or redeem the shares at a specified rate and date. These shares protect the corporation from inflationary pressures.
4.  Non-redeemable Preference Shares: Non- redeemable preference shares are those shares that cannot be redeemed for the entire lifetime of the company. In other words, these shares can only be redeemed when the firm is wound up.