Incorporation of Company

Yes a company can incorporated with Preference Shares.

even companies with gaurantee may not have equity

Originally posted by : HARDIK
	Yes a company can incorporated with Preference Shares.

agreed .......

Dear all,

I am asking for Company with Capital. if the answer is yes then what about the AGM, can a AGM held by Preferential share holders. other approvals, voting rights ect.

No company cant be incorporated without the owners equity and preference shares is not considered as owners equity...

Agreed.

Dear Ashish

You can incorporate the company with preference shares, and no restrictions in Companies Act, 1956, you mention in capital clause that the authorized capital of the company is Rs. 500000 lakhs divided in to 50,000 preference shares of Rs. 10/- each.

In this connection when you file Form 1A, it only ask authorized capital and not ask equity capital and when you file Form 1, you will give details of preference shares instead of equity shares.

Regards

CS Ajay Mishra

Agreed with Ajay sir, there is no restriction as to the kind of share capital either in Section 3 or elsewhere in the Act for forming a company. But one thing to be kept in mind is that a company can not issue irredeemable preference shares or preference share which is redeemable after the expiry of 20 years. While redeeming so, minimum capital requirements u/s 3 should be complied with.

idea of preference share is to give preference to preferernce shareholders than the equity shareholders .... when there is no equity shares where is the question of preference..... preference againts whom?????