Which of the following right is available to Preference shareholders?

Preferential right as to dividend and repayment of capital at the time of liquidation of the Company before the equity shareholders.

The correct answer is option 4- Preferential right as to dividend and repayment of capital at the time of liquidation of the Company before the equity shareholders.

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.