*Cumulative Preference Share* Imagine Rahul owns a small business🤏 and needs 💰 to expand it. He asks his friend Priya to invest ₹10,000 in his business. In return, Rahul gives Priya cumulative preference shares and promises to pay her ₹1,000 every year as a *fixed dividend*. Yearly Scenario: *Year 1*: Rahul’s business is not doing well, so he can’t pay Priya the ₹1,000 dividend. *Year 2*: Again, the business struggles, so Priya doesn’t get her ₹1,000 dividend. *Year 3*: Rahul’s business becomes successful, and he starts making good profits! Now, *because Priya holds cumulative preference shares, Rahul must first pay all the missed dividends before paying anything to other investors*. So in Year 3, Priya will get: ✅ Year 1 dividend → ₹1,000 ✅ Year 2 dividend → ₹1,000 ✅ Year 3 dividend → ₹1,000 💰 Total received = ₹3,000 Only after this, Rahul can pay dividends to other investors. Key Lesson: Cumulative Preference Shareholders (like Priya) never lose unpaid dividends. They will receive all pending dividends once the company makes a profit They get paid before common shareholders (regular investors).