Q.Preference shareholders generally do NOT enjoy which of the following rights?
(A) Fixed rate of dividend
(B) Preferential repayment of capital on winding up
(C) Voting rights in the company's general meetings
(D) Priority over equity shareholders in payment of dividend

Preference shares are named for the preferences they carry over equity shares regarding dividend and capital repayment, but this preferential treatment comes with a trade-off in another right.

In exchange for a fixed dividend and priority in repayment, preference shareholders generally do not get a say in the company's general management through voting, except on matters that directly affect their own class of shares.

We examine each option against what is actually true of preference shares.

(A) A fixed rate of dividend IS a right preference shareholders enjoy — this is one of the defining features of a preference share, so this option describes a right they DO have, making it not the answer.

(B) Preferential repayment of capital on winding up IS also a right preference shareholders enjoy — they are repaid their capital before equity shareholders (though after creditors and debenture holders), so this too is a right they DO have, and is not the answer.

(C) Voting rights in general meetings are, as a general rule, NOT available to preference shareholders, except in special circumstances such as when a resolution directly affects their class of shares or when their dividend has remained unpaid for a specified period. Since the question asks which right they do NOT generally enjoy, this matches.

(D) Priority over equity shareholders in payment of dividend IS a right they enjoy — it is the core preferential feature that gives preference shares their name — so this is not the answer either.

Having confirmed that (A), (B) and (D) are all rights preference shareholders DO have, only (C) remains as the right they generally do NOT have.

A common error is assuming all shareholders automatically have voting rights simply because they hold 'shares'. Remember that the trade-off for a preference shareholder's fixed, prioritised return is the general absence of voting power — the two features go together as a deliberate balance, not a coincidence.