When Preference Shares are redeemed at a price more than its face value or the par value, then it is said that the debentures are redeemed at a premium.
The amount of dividend paid on a preference share is usually expressed as a percentage of nominal value. So, a 5% preference share with a nominal value of Rs. 10 will pay an annual dividend of Rs. 0.5 every year – unless reserves/profits are insufficient.
Non-Cumulative Preference shares don’t accumulate dividends. So, if a company generates a loss in a particular year, the outstanding dividends can not be claimed by shareholders from future profits.
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