Question

A preference share which does not carry the right of sharing in surplus profits is called ______.

Options

• Non-Cumulative Preference Share

• Non-participating Preference Share

• Irredeemable Preference Share

• Non-convertible Preference Share

Answer 1

A preference share which does not carry the right of sharing in surplus profits is called Non-participating Preference Share.

Explanation:

Non-participating preference shares are entitled to a fixed dividend but do not share in the surplus profits of the company after dividends have been paid to equity shareholders. In contrast, participating preference shares can share in surplus profits after equity dividends are distributed.