The ‘non-cumulath’f preference shares’ are those which do not get any dividend if in a particular year there are no profits to pay their preferential
dividends. Their dividends do not accumulate and they cannot claim the unpaid dividends in the subsequent ye.1rs when there are sufficient profits i.e. the
unpaid dividend on ‘non-cumulative preference shares’ is not carried forward. Thus, when there are no profits in a particular year these shares go without
any dividend.
2. P’rticipating md Non-Particip,ting Preference Shares. The ‘participating preference shares’ are those which, in addition to their
preferential dividend, are also entitled to participate in the surpius profits or surplus assets. The
paying the fixed amount of dividend to tlle preference shareholders and a fixed percentage of dividend to the equity shareholders. And the term ‘surplus
assets’ means the balance of assets which is left after paying back
both the preference and equity shareh.olders. The ‘participating preference shareholders’ participate in such surplus alongwith the equity shareholders.
The ‘non-p’rticipating preference shares’ are those which are not entitled to participate in the ‘surplus profits’ or ‘surplus assets’. They arc entitled only to
a fixed rate of dividend every year. Generally, the preference shares are presumed to be ‘non-participating’.
3. Convertible and Non-convertible Preference Shares. The ‘convertible preference shares’ are those which can be converted into equity shares within a
certain period i.e. the holders of such shares have a right to convert these shares into equity shares. The ‘non-convertible preference shares’ are those
which cannot be converted into equity shares.
All preference shares are non-convertible preference shares unless provided otherwise in the terms of issue.
4. Redeemable Preference and Irredeemable Preference Shares. Redeemable Preference Shares (Section 80). A company limited by shares
No comments:
Post a Comment