Question

What are the rights enjoyed by Preference shareholders?

Hint:

Remember: Preference shareholders are paid dividends before common shareholders and have priority in liquidation.

Answer 1

Step 1: Introduction to Preference Shareholders.
Preference shareholders are individuals who hold preference shares in a company. These shareholders have certain rights and advantages over common shareholders.

Step 2: Rights of Preference Shareholders.
The rights enjoyed by preference shareholders include: 1. Right to Fixed Dividend: Preference shareholders are entitled to receive a fixed dividend before common shareholders. 2. Right to Priority in Liquidation: In case the company is liquidated, preference shareholders are given priority in the distribution of assets over common shareholders. 3. Cumulative Right: If the dividend is not paid in one year, it accumulates and must be paid in subsequent years (for cumulative preference shares). 4. Non-voting Rights: Typically, preference shareholders do not have voting rights in the company unless their dividend rights are not paid. 5. Convertible Rights: Some preference shares can be converted into common shares after a certain period.