The correct answer is: A. only when there are profits.
Preference shares are a type of equity share that entitles the holder to a fixed dividend, which is paid out before any dividends are paid to ordinary shareholders. Preference shares are often used by companies to raise capital, as they offer investors a higher level of security than ordinary shares.
However, preference shareholders do not have the same voting rights as ordinary shareholders, and they are also not entitled to any share of the company’s profits if there are insufficient funds to pay the preference dividend.
Therefore, the answer to the question “Dividend on preference capital will be paid ___” is: A. only when there are profits.
Option B is incorrect because preference shareholders are not entitled to a dividend if there are no profits.
Option C is incorrect because preference dividends are not paid out at the discretion of the directors.
Option D is incorrect because preference dividends are not paid out at the discretion of the shareholders.