Non Cumulative Preference Shares

Podcast Duration: 05:23

Hello friends, welcome to another podcast by Angel One!

Aaj hum ek type ke shares ke baare me baat karenge. As per section 43 of the Companies Act 2013, companies do type ke shares issue karne ke liye authorized hain. Yeh hai equity shares and preference shares.

Equity shares issue karna ek easy tareeka hai for companies to raise funds for their business. In equity shares ko khareedne par investors ko company ke voting rights ya company me ownership stakes milte hain.

Preference shares purchase karne me ownership rights nahi milte. Lekin unke perks alag hain. Aaj hum discuss kar rahe hain a type of preference shares known as non cumulative preference shares.

Chaliye jaante hain ye non cumulative preference shares kya hote hain.

Non cumulative preference shares ko simply ‘preference shares’ bhi bola jaata hai. Ye ek company ke doosre share offerings se thoda alag hai.

Preference shareholders ke dividend payments ka ek fixed rate hota hai. Aur in shareholders ko dividend payment ya company ke liquidation ke time payouts ke liye zyaada preference milti hai. Aisa equity shares me nahin hota.

Shares issue karne wale companies kabhi kabhi apne targets meet nahi kar paate ya fr market conditions ke wajah se revenue generate nahi kar pate. Aise situations me woh ya toh dividends pay nahi karti ya fir kam dividends deti hai. Agar koi company apne dividends pay nahin kar pati, toh non cumulative preference shareholders ko woh missed ya unpaid dividend amount future me nahi mil payega. Iska matlab ye hai ki jitne bhi time tak company dividends nahi pay karti, utne time tak ke investors’ ke dividends jo miss huye hain, woh due nahi rahenge aur investors ko dividends nahi milenege. Non cumulative preference shareholders ko uss dividend date se payments milenge jab company revenue generate kar pati hai.

Achha ye toh kafi saare complicated words ho gaye ek saath. Agar aap confused hain toh don’t worry- let’s take an example to break this down.

Maan lijiye ek company ABC Limited ne general public ko equity aur preference shares issue kiye. Issme non cumulative preference shares bhi included hain. Har non cumulative preference share ki face value hai rupees 2000 per share. Company ne shareholders ko annual dividend rate of 15% promise kiya. Aur ABC Ltd. ne har saal ye dividends pay bhi kiye. Per year, dividend ki value hui 15% of 2000 rupees, equals to 300 rupees per share.

Lekin ek saal unke business ke liye itna achha nahi raha. Organizational problems aur unfavourable market scenario ke wajah se expectations se kam amount ka revenue generate ho paya. Aise case me ABC Ltd. could not pay the promised dividends to its shareholders.

But the next year, ABC Ltd. saw a speedy recovery and finally turned gains in their business. And company ne fir se apne shareholders ko dividends payout karna resume kar diya. Lekin ek saal ke joh dividends miss huye, unhe non cumulative preference shareholders request ya claim nahi kar sakte. Agar ABC Ltd ke paas payouts ke baad bhi surplus funds bachte, fir bhi non cumulative preference shareholders are not entitled to it.

Aap soch rahe honge- who is entitled to these missed dividend payouts?

Preference shares ka ek type hota hai cumulative preference shares. When a company is finally able to distribute dividends, inn shares ke holders ko missed payments bhi milti hain.

Toh investors preference shares kyu purchase karte hain? Well, non cumulative preference shares ke kuch advantages hote hain.

Non cumulative preference shares usually saare shares ki categories se zyaada dividends provide karti hain. Equity aur doosre type ke preference shares ke rates of dividend non cumulative preference share se kaafi had tak kam hote hain.

Company ke dividends payout karne ke time aur company ke liquidation ke time par claims me bhi non cumulative preference shareholders ko equity ke compared zyaada preference milta hai.

Iss wajah se ye shares investors ko appeal karte hain. Lekin unpaid dividends lose karna inka ek major disadvantage bhi ho sakta hai. Isiliye preference shares buy karte huye is cheez ko dhyaan me zaroor rakhein.

Jab companies non cumulative preference shares issue karte hain, tab unki ownership aur control dilute nahi hoti. Aur woh inn shares ke against missed dividends owe bhi nahi karte. Aap dekh sakte hain that it is also a good deal for the company.

Agar aap koi bhi promised dividends miss nahin karna chahte, then you can go for cumulative preference shares. Whereas if you want to enjoy a higher rate of dividend, you can choose to go for non cumulative preference shares. Kisi bhi share purchase karne se pehle saare pros and cons consider kar lein.

To find more resources for your investment journey, don’t forget to visit

As usual, happy investing!