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Premkumar VRR

Premkumar VRR (Querist)

09 August 2010 1.whether a company be created only with preference share capital?

CA Sanat Pyne

CA Sanat Pyne (Expert)

09 August 2010 A company cannot be formed with only preference capital, as preference shares do not carry voting rights except in certain circumstances. Voting rights form the basis for corporate actions, particularly in respect of matters placed before general meetings. As the name suggests, preference shares carry preferential rights in relation to other classes of share. Therefore, a company can have only equity capital and cannot have only preference capital. Nothing prevents a company from having both equity and preference capital. Therefore, in the absence of equity capital, there cannot be preference share capital.(1)

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