Question

Those preference shares which do not enjoy the right to share additional profits come under the category of _________________.

• A. irredeemable preference shares
• B. participating preference shares
• C. non-cumulative preference shares
• D. non-participating preference shares

Answer 1

Answer: (D)

non-participating preference shares

Non participating preference shares are those shares which do not have the right to participate in the profits remaining after equity shareholders have been paid dividend. They will not get any extra dividend in case of surplus profits to the company and they are entitled to receive only fixed rate of dividend every year.