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JAMB Economics 1997 Question 23

Question 23

Business Organisations

The shares that must be redeemed first at liquidation of a company are

  1. A.preference shares
  2. B.non-voting ordinary shares
  3. C.ordinary shares
  4. D.debentures.
Show the answer and explanation

Answer: D (debentures.)

Explanation

Debentures are loans to the company, so debenture holders are creditors and are paid before preference and ordinary shareholders at liquidation.