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JAMB Commerce 2003 Question 24

Question 24

Business Units

In the event of the liquidation of a company, the first to be settled are

  1. A.debenture holders
  2. B.members of the board
  3. C.preference shareholders
  4. D.ordinary shareholders.
Show the answer and explanation

Answer: A (debenture holders)

Explanation

Debenture holders are creditors of the company, so they are paid before any shareholders when it is wound up.