Question : A preference share which does not carry the right of sharing in surplus profit is called _________.
Option 1: Redeemable preference shares
Option 2: Non redeemable preference shares
Option 3: Non cumulative preference shares
Option 4: Non-participating preference shares
Correct Answer: Non-participating preference shares
Solution : Answer = Non-participating preference shares
Non-participating preference shares get only a fixed rate of dividend every year and do not carry a right to participate in the surplus profits or in any surplus on winding up. Non-participating preference shares do not have the right to share in surplus profits beyond their fixed dividend. Unlike participating preference shares, they do not entitle shareholders to additional dividends beyond their predetermined rate. These shares typically offer a fixed dividend and do not participate in the surplus profits of the company.
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