Dheerej Kumar (None) (121 Points)
12 January 2010
Amir
(Learner)
(4016 Points)
Replied 12 January 2010
Dear Dheerej,
SR is required in this case...
I agree with u that Preference shareholder's donot carry voting rights in general..
Since law has not provided the meaning of the word "capital" used in Sec 224A, it has to be understood with it's general meaning, which includes "Preference Share Capital"
Dheerej Kumar
(None)
(121 Points)
Replied 12 January 2010
Amir
(Learner)
(4016 Points)
Replied 12 January 2010
Dear Dheerej,
Can u plz specify what else u r looking in this regard..Do you want to know that from where I have come to this conclusion that in General "shares" includes both"equity as well as preference"
Dheerej Kumar
(None)
(121 Points)
Replied 12 January 2010
Amir
(Learner)
(4016 Points)
Replied 12 January 2010
Sec 2(46) defines shares as follows
"share" means share in the share capital of a company, and includes stock except where a distinction between stock and shares is expressed or implied;
It is nowhere mentioned that only Equity Share is included....
Amir
(Learner)
(4016 Points)
Replied 12 January 2010
Dear Dheerej,
Look, I have reproduced Sec 85 of Companies Act, 1956 , which explains that there r 2 types of share capital..
Now if Share Capital would have meant ONLY EQUITY SHARE CAPITAL then there would be no point of sec 85...
I hope u r getting what i am trying to say...
TWO KINDS OF SHARE CAPITAL. (Sec 85)
(1) "Preference share capital" means, with reference to any company limited by shares, whether formed before or after the commencement of this Act, that part of the share capital of the company which fulfils both the following requirements, namely :-
(a) that as respects dividends, it carries or will carry a preferential right to be paid a fixed amount or an amount calculated at a fixed rate, which may be either free of or subject to income-tax; and
(b) that as respect capital, it carries or will carry, on a winding up or repayment of capital, a preferential right to be repaid the amount of the capital paid-up or deemed to have been paid up, whether or not there is a preferential right to the payment of either or both of the following amounts namely :-
(i) any money remaining unpaid, in respect of the amounts specified in clause (a), up to the date of the winding up or repayment of capital; and
(ii) any fixed premium or premium on any fixed scale, specified in the memorandum or articles of the company.
Explanation : Capital shall be deemed to be preference capital, notwithstanding that it is entitled to either or both of the following rights, namely :-
(i) that, as respects dividends, in addition to the preferential right to the amount specified in clause (a), it has a right to participate, whether fully or to a limited extent, with capital not entitled to the preferential right aforesaid;
(ii) that, as respects capital, in addition to the preferential right to the repayment, on a winding up, of the amounts specified in clause (b), it has a right to participate, whether fully or to a limited extent, with capital not entitled to that preferential right in any surplus which may remain after the entire capital has been repaid.
(2) "Equity share capital" means, with reference to any such company, all share capital which is not preference share capital.
(3) The expressions "preference share" and "equity share" shall be construed accordingly.
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