LIVE GST Certification Course by CA Arun Chhajer begins 21st April. Register Now!!

Further Issue of Preference Shares By a Pvt. Ltd. Co.

Krushna (ACS) (119 Points)

20 January 2011

Can anybody help me with the formalities for further issue of Preference Shares by a Private Company,

Correct me if I am wrong

Preferential Issue guidelines and Sec 81 of Companies Act are not applicable to Private Company.

Is thre any limit on the quantum of issue of Preference shares by the company i.e as compared to its Equty Capital base or any other limitation.

Kindly heip,

Krushna

Reply
Follow
Share

8 Replies

nidhigoel89 (Company Secretary ) (594 Points)
Replied 20 January 2011

Hello!

Plz. dnt confuse the term preferential issue and Preference share.....Preference share is a kind of share and preferential issue means to issue further share to existing shareholder of Co...........

Sec 81 is nt at all applicable to pvt. co.

And i dnt think that there is any limit of quantum to issue preference share as per Co. Act.

Further any learned member pl. advice

Regards

Nidhi

Krushna (ACS) (119 Points)
Replied 20 January 2011

Hi Nidhi,

Thanks for your reply.

I know there is a difference between Preferential Issue and Issue of preference shares.

What I wanted to confirm was that preferential issue guidelines are not applicable to Private Companies.

Best Regards

Sudhir Garg (Service) (236 Points)
Replied 20 January 2011

I don't think section 81 applies on further allotment of preference shares.

Regards- Sudhir

nidhigoel89 (Company Secretary ) (594 Points)
Replied 20 January 2011

Hello!

Sry, i misinterpretate the statement

As per my views Sec 81 for further issue of capital and these guidelines are nt at all applicable on Pvt. Co.

Regards

NIdhi

Sudhir Garg (Service) (236 Points)
Replied 20 January 2011

Dear Nidhi

Capital means equity as well as preference. Whether section 81 is applicable on further allotment of preference shares??

Regards- Sudhir

nidhigoel89 (Company Secretary ) (594 Points)
Replied 21 January 2011

Hello!

As per my view Sec 81 would be applicable on Equity as well as preference share. Bt nt applicable on Pvt. Co.

Any contrary views are welcomed.......

Regards

Nidhi

Vasant Patel (Proprietor) (47 Points)
Replied 11 February 2011

Dear Sir

Can you advise me that whether preference shareholder be counted as member for limit of 50 members in case of Private Limited company ?

cs ashwini kumar (Company Secretary in Practice) (173 Points)
Replied 11 February 2011

Dear Mr. Vasant,

Please refer Section 41 of the Companies Act, 1956 with regard to definition of "Member". Accordingly, only equity shareholders can be regarded as member. Further, no company can issued irredeemable preference shares, so the life of the preference shares are limited and also the rights of the preference shareholders are very specific and not general as in the case of equity shareholders.

Best Regards

CS Ashwini Kumar