What are circumulative preference share?

Cumulative preference shares are a type of preferred stock that entitles shareholders to receive dividends that may have been missed in previous years. If a company fails to pay the dividend in any given year, the unpaid amount accumulates, and shareholders must be paid these arrears before any dividends are distributed to common shareholders. This feature provides a level of financial security to cumulative preference shareholders, as they have a claim on dividends even if the company faces financial difficulties.