Question

Who are entitled to share the distributable profits of the company after satisfying the dividend rights of the preference shareholders?

• A. Debenture holders
• B. Bond holders
• C. Equity shareholders
• D. Any policy holders

Hint:

After the preference dividend, the rest of the profit belongs to equity shareholders.

Answer 1

The Correct Option is C

Step 1: Think of the order of payment:
Profit in a company is used in a set order. First, interest goes to lenders as an expense. Then preference shareholders get their fixed dividend. Whatever remains belongs to equity shareholders.

Step 2: Apply it:
The question says the preference dividend is already satisfied. So the next claimant in line for the balance is the equity shareholder.

Step 3: Remove the others:
Debenture holders and bond holders were paid earlier as lenders, through interest. Policy holders have no link with company profit. So only equity shareholders remain.

Final Answer:
Option (3). \[ \boxed{\text{Equity shareholders}} \]