Which of the following statements is true for the type of share?

A) Equity shares are also called ordinary shares.

B) Preference share carries a preferential right to dividend to be paid either as a fixed amount payable to preference shareholders or an amount calculated by a fixed rate of the nominal value of each share before any dividend is paid to the equity shareholders.

C) Preference shares can be participating and non participating.

D) The dividend on equity shares is fixed 

Choose the correct answer from the options given below.

A, B & C only

The correct answer is option 3- A, B & C only.

A) Equity shares are also called ordinary shares. THIS IS TRUE. According to Section 43 of The Companies Act, 2013, an equity share is a share which is not a preference share. In other words, shares which do not enjoy any preferential right in the payment of dividend or repayment of capital, are termed as equity/ordinary shares. The equity shareholders are entitled to share the distributable profits of the company after satisfying the dividend rights of the preference share holders. Equity shares are also called ordinary shares.

B) Preference share carries a preferential right to dividend to be paid either as a fixed amount payable to preference shareholders or an amount calculated by a fixed rate of the nominal value of each share before any dividend is paid to the equity shareholders. THIS IS TRUE.  According to Section 43 of The Companies Act, 2013, a preference share is one, which fulfills the following conditions : (a) That it carries a preferential right to dividend to be paid either as a fixed amount payable to preference shareholders or an amount calculated by a fixed rate of the nominal value of each share before any dividend is paid to the equity shareholders. (b) That with respect to capital it carries or will carry, on the winding up of the company, the preferential right to the repayment of capital before anything is paid to equity shareholders.

C) Preference shares can be participating and non participating. THIS IS TRUE.  According to Section 43 of The Companies Act, 2013, a preference share is one, which fulfills the following conditions : (a) That it carries a preferential right to dividend to be paid either as a fixed amount payable to preference shareholders or an amount calculated by a fixed rate of the nominal value of each share before any dividend is paid to the equity shareholders. (b) That with respect to capital it carries or will carry, on the winding up of the company, the preferential right to the repayment of capital before anything is paid to equity shareholders. However, notwithstanding the above two conditions, a holder of the preference share may have a right to participate fully or to a limited extent in the surpluses of the company as specified in the Memorandum or Articles of the company. Thus, the preference shares can be participating and non participating. Similarly, these shares can be cumulative or non-cumulative, and redeemable or irredeemable.

D) The dividend on equity shares is fixed. THIS IS FALSE as the dividend on equity shares is not fixed and it may vary from year to year depending upon the amount of profits available for distribution.