• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
Free ACCA & CIMA online courses from OpenTuition

Free ACCA & CIMA online courses from OpenTuition

Free Notes, Lectures, Tests and Forums for ACCA and CIMA exams

  • ACCA
  • CIMA
  • FIA
  • OBU
  • Books
  • Forums
  • Search
  • Register
  • Login
  • ACCA Forums
  • Ask ACCA Tutor
  • CIMA Forums
  • Ask CIMA Tutor
  • FIA
  • OBU
  • Buy/Sell Books
  • All Forums
  • Latest Topics

Congratulations to Jamil from Pakistan and Jeeva from Malaysia - Global Prize winners!
see all ACCA December 2022 Genius Hunt Competition winners >>

Specially for OpenTuition students: 20% off BPP Books for ACCA & CIMA exams – Get your BPP Discount Code >>

PREFERANCE SHAREHOLDERS

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA LW Exams › PREFERANCE SHAREHOLDERS

  • This topic has 3 replies, 2 voices, and was last updated 11 months ago by MikeLittle.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • February 28, 2022 at 2:16 pm #649516
    Safiya.12345
    Participant
    • Topics: 61
    • Replies: 111
    • ☆☆

    RIGHTS OF PREFERANCE SHAREHOLDERS

    CEASE TO BE ENTITLED TO ARREAR’S OF UNDECLARED DIVIDENDS WHEN THE COMPANY GOES INTO LIQUIDATION

    this is from bpp chp 12 share capital my doubt is
    1. WHAT ARE UNDECLARED DIVIDENDS ?
    2.WHEN COMPANY GOES INTO LIQUIDATION PREFERANCE SHAREHOLDER’S ARE THE FIRST ONE TO BE PAID SO HOW IS THIER RIGHT CEASED ?
    3. PREFERANCE SHAREHOLDER’S ARE ENTITLED TO RECIEVE CUMULATIVE DIVIDEND’S SO HOW IS THEIR RIGHT CEASED DURING LIQUIDATION

    February 28, 2022 at 9:31 pm #649528
    MikeLittle
    Keymaster
    • Topics: 26
    • Replies: 22705
    • ☆☆☆☆☆

    1 – undeclared dividends? Even though preference shares carry a fixed rate of dividend, for that dividend to be recognised as an appropriation of the year’s profits, it must be declared by the directors and normally passed by ordinary resolution of the company’s shareholders in general meeting (I believe , though, that it may be approved simply by directors’ resolution at a board meeting … but don’t worry about that. As a question in a law exam, that particular point has around a million : one chance of appearing!)

    2 – preference shareholders first to be paid in a liquidation? NO!!!! I think that you are confusing preferential creditors with preference shareholders. ALL the company’s creditors must be paid in full in a company liquidation (other than the exempted part, see course notes!) before ANY shareholder receives a cent. The preference shareholders do have a preferential entitlement in that they must be paid in full before the equity shareholders receive anything, but they (pref shs)are quite low in the sequence of distribution of a company’s assets in a liquidation

    3 – cumulative preference dividends? As answered in note 1 above, yes, the preference dividend is an appropriation of company profits and is cumulative (unless stated otherwise in the terms of issue of that class of shares) But, also as stated in answer 1 above, it’s not an appropriation unless and until it is declared by the directors. If the directors fail to declare the year’s preference dividend, then it’s not payable and it’s not an appropriation of this year’s profits. And therefore isn’t payable in a liquidation. And as-yet-unpaid DECLARED preference dividends from earlier years would be classed as payable

    Does that make it any clearer?

    (In future, please post in lower case. Using upper case feels like you’re shouting at me!)

    March 2, 2022 at 6:13 pm #649672
    Safiya.12345
    Participant
    • Topics: 61
    • Replies: 111
    • ☆☆

    So basically not declared not paid

    Thank u so much sir ,like thank you soooooo much

    March 3, 2022 at 7:05 am #649696
    MikeLittle
    Keymaster
    • Topics: 26
    • Replies: 22705
    • ☆☆☆☆☆

    You’re verrrrry welcome! 🙂

  • Author
    Posts
Viewing 4 posts - 1 through 4 (of 4 total)
  • You must be logged in to reply to this topic.
Log In

Primary Sidebar

ACCA News:

 

ACCA My Exam Performance for non-variant Applied Skills exams is available NOW

NEW! Download the ACCA Pass Guide

FREE Verifiable CPD for ACCA Members

ACCA mock exams and debrief videos

ACCA Options:  “Read the Mind of the Marker” articles

Subscribe to ACCA’s Student Accountant Direct

Donate

If you have benefited from OpenTuition please donate.

ACCA CBE 2023 Exams

Instant Poll * How was your exam, and what was the result?

BT CBE exam was.. | MA CBE exam was..
FA CBE exam was.. | LW CBE exam was..

Specially for OpenTuition students

20% off BPP Books

Get BPP Discount Code

Latest comments

  • AnnaTeddy on Basic group structures – SPLOCI introduction and example – ACCA (SBR) lectures
  • tanyanti on Conceptual Framework – ACCA SBR lecture
  • John Moffat on Statement of Cash Flows (part b) Example 1 – ACCA Financial Accounting (FA) lectures
  • Joanne94 on Statement of Cash Flows (part b) Example 1 – ACCA Financial Accounting (FA) lectures
  • Ken Garrett on Digital strategy – CIMA E3

Copyright © 2023 · Support · Contact · Advertising · OpenLicense · About · Sitemap · Comments · Log in


We use cookies to show you relevant advertising, find out more: Privacy Policy · Cookie Policy