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Hi Sir,
Which two of the following are implied rights of preference shareholders?
A) The right to receive a dividend is cumulative
B) If the company goes into liquidation, preference shareholders are entitled to claim all arrears of dividend from the liquidator.
C) As well as rights to their preference dividends, preference shareholders can share equally in dividends payable to ordinary shareholders.
D) Preference shareholders have equal voting rights to ordinary shareholders.Answer provided
A-D
No problem with answer A, however I though that preference shares don’t have the same voting rights to ordinary shareholder.
Thanks
Gabbi
Agreed with A but I’m surprised with D. Where’s the question from? It’s a strange answer, indeed!
I can only accept A – none of the other 3 are acceptable to me 🙁
The answer provided in the book is: A and D are implied rights, the others have to be stated explicitly
It sound to me as being a mistake as in the text book is written:“Preference shares not to carry a right to vote, or voting is permitted in specified circumstances. For example failure to pay the preferences dividend, variation of their rights or resolution to wind up”
Thanks
Gabbi
Ok, I can accept that. But that doesn’t include option D “equal voting rights to ordinary shareholders”
Sir, the textbook mentions that the following statement is expressly provided.
“Preference shares not to carry a right to vote, or voting is permitted in specified circumstances. For example failure to pay the preferences dividend, variation of their rights or resolution to wind up”
Does this mean that this clause is to be mentioned when issuing preference shares? Or this is implied?
It is implied (at least, according to my understanding!) that preference shares do not have the right to vote. It could be the case that the constitution does specifically allow preference shareholders to vote, but that would only likely be in most unusual situations.
The examples given are suggested situations
Of course, preference shares COULD be issued with all sorts of rights attached to them – dependent upon the wording of those rights at the time of the issue of those shares
But normally, preference shares do NOT have the right to vote,
Thank You for clearing my doubts. I don’t know what I would have done if opentuition never existed 🙂
Thanks again
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