Which share type is paid out before ordinary shares and typically has no voting rights?

Which share type is paid out before ordinary shares and typically has no voting rights?

• A. Preference shares
• B. Ordinary shares
• C. Deferred shares
• D. Non-voting shares

Answer: (A)

The key idea is how different share classes handle distributions and voting rights. Preference shares are designed to receive dividends before ordinary shares, typically at a fixed rate, and they usually carry no voting rights. This combination matches the statement that the share type is paid out before ordinary shares and has no voting rights, making it the best fit. Ordinary shares represent the standard equity, with voting rights and dividends paid only after preferences. Deferred shares may have restricted or delayed rights and are not typically described as being paid before ordinary shares. Non-voting shares lack voting rights but do not necessarily have priority in payments over ordinary shares.

The key idea is how different share classes handle distributions and voting rights. Preference shares are designed to receive dividends before ordinary shares, typically at a fixed rate, and they usually carry no voting rights. This combination matches the statement that the share type is paid out before ordinary shares and has no voting rights, making it the best fit. Ordinary shares represent the standard equity, with voting rights and dividends paid only after preferences. Deferred shares may have restricted or delayed rights and are not typically described as being paid before ordinary shares. Non-voting shares lack voting rights but do not necessarily have priority in payments over ordinary shares.