preferance shares

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03 January 2011 Dear All,

We have an Private Limited Company incorporated on September 2010 with 1 Lac Authorised and paid up capital.

We want to issue Rs. 10 crore preferance shares.

Can we issue?

If yes, then can we issue preferance share at different dividend rates i.e. For first 3 year rate of dividend will be 10%.
and 4 th year @ 10.25 and at 5 th year @10.50%.

udit sharma

udit sharma (Expert)

03 January 2011 Hi...

In my opinion, the answer to ur query is as under:

1. Check if the AOA of the Company contain a Clause to issue Preference Share Capital and if it does not contain such clause, amend the AOA of the Company so as to insert the provisions of issue and redemption of Preference Shares.

You will have to alter the Capital Clause of the MOA of the Company so as to increase and reclassify the Authorised Capital of the Company into Equity and Preference Share Capital by means of an Ordinary Resolution(if the Articles provides for Special Resolution, then by Special Resolution) to be passed by the members at the GM of the Company.

The Preference Shares shall carry a fix rate of dividend and cant carry different rates for different years.

Regards

CS Udit Sharma

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vishwas gajanan chandhaikar

vishwas gajanan chandhaikar (Querist)

03 January 2011 Thanks Udit for your advice,

But, if our company make an agreement that, they will issue preference share for 3 year @ 10 % and on 4 th year rate will be 11% and on 5 th year 15%.

Can we do so by making an angreement ?