Cumulative Preference Share

Tax Glossary Definition

Cumulative Preference Share

A cumulative preference share is a type of preference share that entitles the shareholder to receive dividends even if they are not declared in a particular year. The unpaid dividends are carried forward and must be paid in subsequent years before any dividends are distributed to equity shareholders.

Example: If a company cannot pay dividends in FY 2024–25, the dividends on cumulative preference shares are carried forward and paid in FY 2025–26 along with that year’s dividend.

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