Question

Consider the following statements:
(1) Preference shares can be redeemed either out of profit of the company or out of the proceeds of fresh issue.
(2) Preference shares are redeemed after equity shares.
(3) Preference shareholders have preference right as to dividend as well as return of capital.
(4) A company cannot issue preference shares redeemable after 20 years.
The correct statements are ________________.

• A. 1, 2 and 3
• B. 1 only
• C. 1 and 3 only
• D. 1, 3, 4

Answer 1

The correct option is D 1, 3, 4

Preference shares are the shares which promise the Dividend at a fixed rate or a fixed amount on these shares before any dividend on equity shares.

Return of preference share capital before the return of equity share capital at the time of winding up of the company.

preference share also have a right to participate or in part in excess profits left after been paid to equity shares, or has a right to participate i the premium at the time of redemption. But these shares do not carry voting rights.