Which of the following correctly defines 'Cumulative Preference Shares' as distinct from 'Non-Cumulative Preference Shares'?

The key distinction between cumulative and non-cumulative preference shares relates to dividend accumulation. Cumulative preference shares: if a company does not declare a dividend in a particular year (due to insufficient profits), the unpaid dividend accumulates as 'dividend in arrears' and must be paid in future profitable years before any dividend can be paid to equity shareholders. This protects preference shareholders from permanent loss of dividends. Non-cumulative preference shares: if a dividend is not declared in a year, the preference shareholder has no right to claim it later — the unpaid dividend is permanently forfeited. Other types: Redeemable (can be bought back by company), Convertible (can be converted to equity), Participating (share in surplus profits beyond fixed dividend rate). All preference shares typically have priority over equity shares in dividend payment and capital repayment during winding up.