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Conversion of cumulative preference shares to non-cumulative preference shares under Sec 48 results in:
ATriggering of buy-back
BIncrease in share capital
CDecrease in share capital
DChange in dividend obligation pattern (arrears no longer accumulate)
Answer & Solution
Correct answer: D. Change in dividend obligation pattern (arrears no longer accumulate)
1. Step 1: Cumulative dividends accumulate as arrears; non-cumulative do not.
2. Step 2: Conversion changes the obligation pattern but not the capital amount.
3. Step 3: Hence (A).
_Source: ICAI BoS CA Inter Paper 1, Ch 14 "Internal Reconstruction"_