Can a company convert their preference share into equity

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Jailendra Shukla (Querist)
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24 March 2012 Sir,
I want to know that can a company convert their Preference share into Equity share or not. Under which section of companies act.

Ajay Mishra

Ajay Mishra (Expert)
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25 March 2012 Hi

Yes, you can subject to the provisions of their articles. Section 80 deal with preference shares.

A company limited by shares may, if authorised by its Articles, issue preference shares. This means that a public company or a private company may issue preference shares only if its Articles authorise to do so.

Convertible preference shares.—These shares may be converted into equity shares as per the terms and conditions of their issue.

Non-convertible preference shares.—These shares are not convertible into equity shares but have the preferential rights to payment of capital in the event of liquidation of the company or otherwise.

Jailendra Shukla

Jailendra Shukla (Querist)
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26 March 2012 Thanks Sir, for your reply......

This is very useful to me

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