Question

Participating Preference Shares is one which carries __________________.

• A. A right to receive arrears of dividend
• B. A rights to participate in the surplus profits and surplus assets
• C. A right to participate in the surplus profits or surplus assets or both
• D. A right to conversion into equity share

Answer 1

The correct option is C A right to participate in the surplus profits or surplus assets or both

Ordinary shareholders are entitled to participate in the surplus profits or assets of the company which remain after repayment of capital. Preference shareholders have no right to participate in surplus profits unless the right to participate in surplus profits is expressly set out in the articles.