SHARE CAPITAL

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Guest

Guest (Querist)

19 March 2011 please explain whether the statement is true or false
A public company cannot issue equity shares with differential rights as to Dividend

Jayashree S Iyer

Jayashree S Iyer (Expert)
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21 March 2011 As per The Companies (Issue of Share Capital with Differential Voting Rights) Rules, 2001, the companies can issue shares with differential rights as to dividend, voting or otherwise subject to the conditions specified therein.

However SEBI has put restrictions effective from July 21, 2009 that a listed company shall not issue shares that have either superior voting rights or higher dividend entitlements, compared to the ordinary shares listed on the exchange.

So according to me, the restriction as to higher dividend or voting rights is in respect of listed companies only.

Other experts are requested to give their opion.

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