Select the correct statements from the following. A. Preference Share…

Select the correct statements from the following.

A. Preference Share Capital is a part of Share Capital.

B. Preference Share Capital is a part of Non-Current Liability.

C. Preference Share Capital is a Current Liability

D. Preference Share holders do not have voting right.

E. Preference Share Capital is repaid before the payment of Equity share holders in case of winding up of the company.

Choose the correct answer from the options given below :

Answer & explanation

Correct answer: option 3

The correct answer is Option (3) → A, D and E only

A. Preference Share Capital is a part of Share Capital. — True. A company issues two types of shares, preference and equity; both form its share capital.

B. Preference Share Capital is a part of Non-Current Liability. — False. Shares are owned capital, shown under Shareholders’ Funds, not under liabilities.

C. Preference Share Capital is a Current Liability — False. For the same reason it is not a current liability either.

D. Preference Share holders do not have voting right. — True. Under section 47 of the Companies Act, 2013 they vote only on resolutions that directly affect their rights (or when their dividend is unpaid for two years), not in the general run of company business.

E. Preference Share Capital is repaid before the payment of Equity share holders in case of winding up of the company. — True. This preferential right to repayment of capital is one of the two conditions of a preference share.

NCERT (2026-27 edition):
Nature and Classes of Shares – “… As per The Companies Act, a company can issue two types of shares (1) preference shares, and (2) equity shares (also called ordinary shares).”

NCERT (2026-27 edition):
Preference Shares – “… (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.”

NCERT (2026-27 edition):
Ownership – “… A share is a part of the owned capital whereas a debenture is a part of borrowed capital.”