Voting right of preference shareholders

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Querist : Anonymous

Querist : Anonymous (Querist)

14 December 2012 A listed company paid up capital division is 10 crore equity @ Rs. 10 & 10 lac cumulative convertible Preference shareholder 2 RS. 100. Preference shareholders of the company carry voting right as per sec. 87 (2) of the Companies Act, 1956.
I want to know how their vote will be calculated , whether they will be converted in same price as equity holders have or how please explain?

Ajay Mishra

Ajay Mishra (Expert)
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14 December 2012 Hi

Voting rights of preference shareholders
Section 87(2)(a) provides that every member of a company limited by shares and holding any preference share capital therein shall have a right to vote in respect of such share capital, on every resolutions placed before the company which directly affect the rights attached to his preference shares.
It is only if the dividend due on cumulative preference shares remains unpaid for a aggregate period of not less than two years preceding the date of commencement of meeting that a cumulative preference shareholder gets the right to vote on all resolutions. [Hotel Queen Road (P) Ltd. v Hill Crest Reality Sdn. Bhd. (2006) 68 SCL 197 (Del)].
If voting is done by way of poll then preference shareholders will have right to vote in proportion to their shares of the total paid up share capital of the company.
The voting right shall be in the same proportion as the capital paid up, in respect of the preference shares bears of the total paid up equity capital of the company.
Explanation of section 87(2)(a) provides that any resolution for winding up the company or for repayment or reduction of its share capital shall be deemed directly to affect the rights attached to preference shares within the meaning of this clause.

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