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?
- 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
- Applicability
- Gst Sales of FY 2023-24
- GSTR-3B - Do I file nil when there is no sale but I've bought raw materials
- RCM - commercial rent paid to URP under GST
- Whether still royalty
- Legal heir raised refund , but refund issued to the closed account of deceased.
- Offsetting interest income against derivative trading losses
- Passed group 2 exams under wrong gender
- REQUIREMENT OF 15CB
- QUERY FOR RCM ON RENT
- APPEAL-CIT
- Payable outstanding for years disallowance
- Issue of gst e invoice
- Interchangeable words in accounts
- Adjusted profit/Loss in the case of LLP and Pvt. Ltd.company
- How to adjusted advances given or receipt
- Foreign vendor without PAN unable to to register due to non receipt of OTP on foreign number ?
Trending Online Classes
-
Excel Mastery Program
CA Rishabh Pugalia
CAclubindia
