JOSEPH DAVID (GM FINANCE) (286 Points)
19 September 20081.Can a company issue to its equity shareholders bonus preference shares?
If it is permitted what provisions are applicable under companies act?
What about income tax? will it be taxable in the hands of equity shareholders
2.A company wants to issue redeemable preference shares -any minimum coupon rate to maintain or any limit
on redemption amount
thanks in advance
joseph david
Lineesh James
(Company Secretary)
(30 Points)
Replied 22 September 2008
1. yes, refer section 81& 80
2. No
3.Refer section 80
CS MANOJ KUMAR PANDA
(Company Secretary)
(23 Points)
Replied 13 May 2010
can a company issue bonus preference shares to its prefernce shareholders
Richa Agarwalla
(Practising Company Secretary)
(33 Points)
Replied 13 September 2012
A listed company wants to issue bonus Equity shares to its preference shareholders (not to equity shareholders) Whether it can do so?????
CA Ankit Kumar Jain
(CA Job)
(22 Points)
Replied 05 June 2013
In which section it is written that preference share holders can be issued bonus shares. as only two benefits are provided to the preference shareholders.
P C Agrawal
(Registered independent director Past Chairman of Aurangabad Chapter of ICSI Practicing Company Secretary at Aurangabad)
(8229 Points)
Replied 05 June 2013
Dear friends,
Accumulated profits of the company belong to the equity shareholders. If the Articles so permit, such profits can be capitalised by issue of bonus shares (whether equity or preference) or even debentures. Article 96 & 97 of Table A deal with capitalisation of profits. Hence equity shareholders can be issued bonus in any form (equity shares, preference shares or debentures).
As regards preference shareholders, they are entitled to dividend at the agreed rate. In case bonus shares (equity or preference) are to be issued to preference shareholders, it will amount to variation of rights of shareholders and will need approval of equity & preference shareholders in their class meetings u/s 106 of the Act. Hence in my view preference shareholders can also be issued bonus shares with the approval of members u/s 106.
As regards, minimum rate of coupon rate of dividend, no such rate has been prescribed in the Act and the company can decide any minimum rate. I have come across companies having issued even 0% Preference Shares.
Contrary views are welcome.
Thanks
CAclubindia
