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As per the Companies Act, 2013, a company can issue the following types of shares

Kinds of Shares

 

As per the Companies Act, 2013, a company can issue the following types of shares

(1) Preference Shares: Preference shares of a company having share capital means such shares which are given priority in payment of dividend and return of capital on winding up of the company. In this way the following rights are provided to the holders of preference shares:

 

(i) Dividend Preference- When the profits of the company are divided among the shareholders, the preference shareholders have the right to receive the first dividend out of the profits of the company. After distributing the profit to them, out of the remaining amount, dividend is given to the equity shareholders.

 

(ii) Preference regarding return of capital- When the company is dissolved, the amount remaining after paying all the creditors of the company will be returned to the preference shareholders instead of equity shareholders. After payment of these, the balance amount is paid to the equity shareholders.

 

In addition to the above rights, preference shareholders may also enjoy the following rights:

 

(i) Share in the additional profit Preference shareholders can also be given the right that when the company has additional profit, the profit will be distributed to them in a specified proportion.

 

(ii) Share in excess – Sometimes it is also granted that the preference shareholders will get a share in that if any amount still remains after the payment of capital of all types of shareholders on the dissolution of the company. .

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