If a preference share is said to be 'non-cumulative' this means that the:

• A. Right to an unpaid preference dividend at the end of the company's financial year is carried forward to the next financial year until eventually paid.
• B. Right to an unpaid preference dividend is lost at the end of the company's financial year.
• C. Shares are not redeemable on wind up of the company.
• D. There are limits on the maximum number of shares any one investor can hold.

Answer: (B)

The key idea here is how non-cumulative preference shares handle dividends. With non-cumulative shares, if the company does not declare a dividend in a given year, the right to that unpaid dividend does not carry forward. It is lost at the end of the financial year. In other words, holders don’t get arrears paid in the future—the dividend privilege is not cumulative.

This differs from cumulative preference shares, where any unpaid dividends accumulate and must be paid later before ordinary shareholders receive dividends. The other options don’t fit because they describe different concepts: one describes carrying forward unpaid dividends (which is the cumulative case), while the remaining options concern redeemability or ownership limits, neither of which is about how unpaid dividends are treated.