Question

Unless otherwise stated, a preference share is always deemed to be ______.

Options

• Cumulative, participating and non-convertible

• Non-cumulative, non-participating and non-convertible

• Cumulative, non-participating and non-convertible

• Non-cumulative, participating and non-convertible

Answer 1

Unless otherwise stated, a preference share is always deemed to be Cumulative, non-participating and non-convertible.

Explanation:

1. Cumulative: meaning unpaid dividends accumulate and must be paid in the future before equity dividends.

2. Non-participating: meaning it does not share in surplus profits beyond its fixed dividend.

3. Non-convertible: meaning it cannot be converted into equity shares.