Preference shares
This query is : Resolved
26 November 2008
Can a newly incorporated private company issue only preference shares(no equity shares). I understand there would be practical difficulties in complying Companies Act with regards to voting rights and quorum etc. However legally whether a new pvt co. can issue preference shares
26 November 2008
Section 85 does not apply to Private Companies. They may issue any kind of shares.
Secondly, Section 85 of the Companies Act provides that there may be two kinds of shares :-
1. Preference shares
2. Equity shares
Unless there is another already existing class of shares over which the preference shares shall be "preferred" (whether in terms of repayment or dividend or otherwise), the shares cannot be called prefernce shares. Therefore, there shoul be equity shares before the preference shares are issued. in other words : Where there is only one class of shares, there is no question of preferential treatment of one class over another.
You may refer to Bihar State Financial Corporation V. CIT, Bihar (1976) in this regard.
Secondly, Section 85 of the Companies Act provides that there may be two kinds of shares :-
1. Preference shares
2. Equity shares
Unless there is another already existing class of shares over which the preference shares shall be "preferred" (whether in terms of repayment or dividend or otherwise), the shares cannot be called prefernce shares. Therefore, there shoul be equity shares before the preference shares are issued. in other words : Where there is only one class of shares, there is no question of preferential treatment of one class over another.
You may refer to Bihar State Financial Corporation V. CIT, Bihar (1976) in this regard.
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Is Aadhar PAN linking required for opening bank account?
- Applicability
- CPC Processing IT Return for AY 2023-24 without recognizing the Taxation Option under New Regime
- Where to show the RCM on Rent paid to unregistered landlord
- RCM - commercial rent paid to URP under GST
- TDS NUMBER SURRENDER
- GSTR-3B - Do I file nil when there is no sale but I've bought raw materials
- Legal heir raised refund , but refund issued to the closed account of deceased.
- Gst Sales of FY 2023-24
- Offsetting interest income against derivative trading losses
- My Last working day in current org is in novemebr 2024 but they are asking me to submit IT proof
- Indexation benefit applicability
- SEC 54 OF IT ACT
- Passed group 2 exams under wrong gender
- REQUIREMENT OF 15CB
- QUERY FOR RCM ON RENT
- APPEAL-CIT
- Payable outstanding for years disallowance
- Whether still royalty
- Issue of gst e invoice
Trending Online Classes
-
Excel Mastery Program
CA Rishabh Pugalia
CAclubindia
