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CSEET · Business Laws and Management · Elements of Company Law

Which feature makes part of the issued share capital of a company 'preference share capital' under Section 43?

Preference share capital is the part of issued capital that carries a preferential right to dividend, either a fixed amount or a fixed rate, and a preferential right to repayment of the paid-up capital on winding up or repayment of capital.

  1. AIt carries a preferential right to dividend at a fixed amount or rate and to repayment of capital on winding upCorrect
  2. BIt carries more votes per share than other shares
  3. CIt can be issued only to the public
  4. DIt can never be repaid during the life of the company

Explanation

Section 43 describes preference capital as that part of issued capital carrying a preferential right to payment of dividend, as a fixed amount or at a fixed rate, and to repayment of paid-up capital on winding up or repayment of capital. Extra votes or non-repayability are not the test.

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