Can a Company incorporate with preferential shares capital without equity? Please state reasons
9 Replies
HARDIK
(COMPANY SECRETARY NCFM (Corporate Governance ))
(664 Points)
Replied 22 December 2010
Yes a company can incorporated with Preference Shares.
CA CS CIMA Prakash Somani
(Landmark Group)
(23502 Points)
Replied 22 December 2010
even companies with gaurantee may not have equity
(Guest)
| Originally posted by : HARDIK | ||
 |
Yes a company can incorporated with Preference Shares. |
 |
agreed .......
Ashish Sharma
(Service)
(1028 Points)
Replied 22 December 2010
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.
Jayant Singh
(Audit Manager)
(22 Points)
Replied 22 December 2010
No company cant be incorporated without the owners equity and preference shares is not considered as owners equity...
Ajay Mishra
(Company Secretary)
(74337 Points)
Replied 23 December 2010
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
Syam kamal
(Company Secretary)
(156 Points)
Replied 23 December 2010
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.
CA.CMA.Prasanna Ganapathy.R
(ACA,Grad.CWA)
(135 Points)
Replied 28 December 2010
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?????
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