Q.A shareholder who is entitled to receive dividend at a fixed, pre-decided rate BEFORE any dividend is paid to equity shareholders, and to repayment of capital before equity shareholders on winding up, but who ordinarily has no voting right, holds:
(A) Equity Shares
(B) Preference Shares
(C) Debentures
(D) Bonds

A fixed, preferential dividend paid before equity, priority on winding up, and ordinarily no vote, is the defining bundle of rights of a preference share.

A Preference Share represents ownership capital with two specific preferences over equity shares: a fixed-rate dividend paid before any equity dividend, and priority in repayment of capital on winding up, ahead of equity shareholders. In exchange, a preference shareholder ordinarily has no voting right on general company matters.

Option-by-option analysis:

• (A) Incorrect — an equity shareholder has no fixed dividend and no preference in payment; dividend is paid only if declared, and only after preference shareholders are paid.
• (B) Correct — this precisely describes a Preference Share. …