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Definition: Sec 2(84) Share means a share in the share capital of the company and include stocks
Meaning: A share is the smallest unit into which the share capital of a company is divided.
Preference Share capital: which carries or would carry a preferential right with respect to:
a) Payment of dividend
Such preferential rights as to payment of dividend may be-
a) With respect to fixed rate
b) With respect to fixed amount
c) Free of income tax
d) Subject to income tax
b) Preferntial right as to repayment of capital in case of winding up of the company.
Share capital shall be deemed to be preference share capital whether it entitle one or both below
mentioned rights.
a) Participation in surplus profit: Right to participate in surplus profit with the equity share capital
in the surplus profit in the case of payment of dividend.
b) Participation in surplus asset: Right to participate with the equity share capital in the surplus
asset of the company remain after the entire share capital is repaid in the case of winding up.
Equity Share capital: share capital which is not preference share capital.
Nature of Rights: The holder of equity share with differential rights shall enjoy all other rights such as
bonus shares, right shares etc.which the holder of equity shares are entitled to.
No conversion: Shall not convert existing equity share capital with voting rights into equity share capital
carrying differential rights and vice versa.
a) equity share capital shall have right to vote on every resolution placed before the company and
b) voting right on poll shall be in proportion to paid-up equity capital
a) vote only on resolutions which directly affect rights attached to preference shares and,
b) resolution for winding up of the company
c) voting right on poll in proportion to paid-up preference capital
Where dividend not been paid for a period of 2 years or more such class of preference shareholders
have right to vote on all the resolutions placed before the company
Consent of shareholder of other class also required: If consent variation of right of one class affect the
right of other class then.
a) Consent in writing of the holder for not less than th of the issued shares of the class also be
rquired
b) The provision of this section apply to such variation.
4. Action of Tribunal:
a) either confirm variation or disallow
b) Decision of the Tribunal is final.
order be filed with ROC within 30 days after service on the Company.
Fully paid up shares: Only fully paid up preference shares can be redeemed
c) Out of fresh issue of share made for the purpose of such redemption
Premium Payable on such redemption:
Creation of CRR
a) Creation of CRR is mandatory if the preference shares are redeemed out of profit.
b) Amount to be transferred to CRR out of profit of the company = Nominal value of preference
shares redeemed out of profit.
Utilisation of CRR:
a) Only for the purpose of issuing fully paid bonus shares to the members.
b) All the provisions of this Act realating to reduction of preference share capital shall apply to CRR,
as if CRR were the paid up capital of the company.
Notice to Registrar:
As per sec 64, notice of redemption to preference share is to be given to ROC
- Within 30 days..in prescribed formalong with copy of altered memorandum.