If the preferred shares are designated as cumulative and the corporation declares dividends,then it is obligated to pay any dividends in arrears first.

Question

Quizplus · Accepted Answer

When preferred shares are designated as cumulative, any missed dividends must be paid before common share dividends can be paid. This means that the corporation is obligated to pay any dividends in arrears first, before it can declare and pay any new dividends on either the preferred or common shares.

If the Preferred Shares Are Designated as Cumulative and the Corporation