preference Shareholders rights

The Preference Shareholdres enjoy preferential right in the payment of Dividend during the lifetime of the company.

Their claim to the dividend is prior to the claim of Equity shareholdres or any other class of share holders.

The dividend rate is fixed whether the company makes profit or no and if the Co. skips the Preference Dividends for 3 years then it has to grant voting rights to preference shareholdres for the matters affevting them.

Dear Hiren,

Kindly quote the Section Pls.and elaborate what if the Company has not declared the dividend and if declared but we hvn't received the same.What is the course of action in both cases?

Its Urgent Pls.

Meenu

Go through Section 87 of the companies act, 1956.

Regards

Gud Morning Garg Sir,

Sir my query is what if the company has coverted the pref shares into equity Shares? What is the pref. shareholders rights for dividend then?For eg if conversion is done in 2003 and we hold the shares from 2001 then what if we hvn't receive the dividend for 2001-2003? can we as a pref. shareholders do anything?

Pls. expedite.

Regards,

Meenu

and what if that before the completion of 3 years the co. has given the notice for conversion of pref. shares into equity.Then what rt. pref. shareholders have?

you can claim pref div for the year 2001-2003 as a pref shareholder at any time in case of cumulative pref shares.

After conversion in to eq share pref shareholder lost their pref right of div.

We have taken the shares of Pvt. ltd. company now whether section 87 is applicalbe to us?

Secondly,The shares are converted into equity in 2003, now whether in 2009 we can claim dividend?

If the Co. has not at all declared dividend then also  whether pref. sharesholders can  be entitled for dividend?

Kindly clarify sir.

Meenu

Section 87 is applicable to every company.

Yes you can claim dividend if share are cumulative pref shares.

Yes as per the rate of pref div they are entitled of dividend. (for example 6% pref shareholders)

But in Ramiya it is metioned that Section 85  to 90 do not  apply  to pvt co. unless it is subsidiary of a public company.

Secondly, if the company has not opted the conversion of pref. shares into equity then what is the status? co'z it is optionally cumaulative pref. shares. Now whether the accumulated dividend will be received by the Company?

It is also stated in the Ramiya that" pref. shareholders will entitled to dividend only if Company declared it and in our case the company has not declared the same.

where the 6% rate is specified?

Kindly quote the specified section for my reference pls.

Regards,

meenu

Kindly reply if the company has not declared the dividend can the pref. shareholders claim the same even then?

If it is cumulative preference share then the arrears are as good as dividend declared.

Yes, indeed it is optional cumulative pref. shares. but what if the co. has not declared dividend? can then also claim can be made

the voting power on preference shares springs up involuntarily, once the arrears on dividend payment cross the stipulated timelines.

comment

can the pref. shareholders claim for voting rights as the diviend is unpaid for more than 2 years although the company has not declred the dividend atall.