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types of fractions

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

Preference Shares Preferences of a company having share capital

Shares means such shares which are given priority in respect of 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) Preference regarding dividend When the profits of the company are distributed to the shareholders, then 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 company

The amount remaining after paying the creditors is preferred over equity shareholders

The capital will be returned to the shareholders. Out of the amount remaining after paying them, the equity shareholders payment is made.

In addition to the above rights, the preference shareholders can also get the following rights (i) Share in the additional profit – Preference shareholders can also be given the right that when the company has additional profit, then the profit is distributed to them in a specified proportion. will go.

(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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