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Sources of Corporate Finance — Secretarial Practice STD 12 Commerce / Arts — Question

Maharashtra BoardEnglish MediumSTD 12 Commerce / ArtsSecretarial PracticeSources of Corporate Finance4 Marks
Question
Preference Shares do not carry normal voting rights.
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Answer

  • Preference shares enjoy priority or preference over equity shareholders as regards payment of dividends and repayment of capital.
  • They carry a fixed rate of dividend.
  • They do not take much risk as they are cautious investors.
  • They attend class meetings if they have any problem affecting their interests or dividend is not paid to them for two or more consecutive years.
  • As they do not take risks, they do not attend general meetings or take part in the management nor vote at the meetings.
  • Thus, it is rightly said, that the preference shares do not carry voting rights.

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