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Issue of preference shares

sakshi (CS) (261 Points)

15 February 2011

What is the procedure for the issue of preference shares?

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11 Replies

pramod yadav (Company Secretary) (150 Points)
Replied 15 February 2011

Dear Sakshi ,

pass the Board resolution for issue of preference shares and take the approval of members in EGM then file form no.2 and 23 for effect of the resolution for passing.

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Sudhir Garg (Service) (236 Points)
Replied 15 February 2011

In addition to above suggestion, please also refer to the provision contained in the Articles of Association of the Company. Further, as per my understanding, Authorised share capital is also required to be bifurcated in Equity and Preference share capital. This will need passing of required resolution in General meeting.

Views of other members are welcomes.

Regards- Sudhir

sakshi (CS) (261 Points)
Replied 15 February 2011

Thanks a lot for your suggestions.

But in case if a listed Company wants to issue preference shares, then what will be the process??

Regards

Sakshi

Jaideep (Service) (1368 Points)
Replied 15 February 2011

No need to follow ICDR Regulations Chapter VII.

Jaideep (Service) (1368 Points)
Replied 15 February 2011

For preference share, compliance of section 81A will suffice.

I interpreted, question in correctly... appearing two replies... dont know how to delete..

Dear Members - Plz, accept my apologies for the same.

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CS Ankur Srivastava (Company Secretary & Compliance Officer) (17853 Points)
Replied 15 February 2011

For issuance of Preference Shares.

First of all, Authorised Share Capital is to be bifurcated accordingly.

Stock Exchange is to be properly informed.

Just to follow Section 81(1A) and obtain approval of shareholders.

Properly set out the terms and conditions for issuance and redemption of preference share capital.

Hold Board Meeting and allot preference shares.

sakshi (CS) (261 Points)
Replied 15 February 2011

Stock Exchange Complianeces involve only prior intimation of he BM rite Sirs??

Apart from that any other SEBI complianes is required??

sakshi (CS) (261 Points)
Replied 16 February 2011

ANKUR SIR

By Bifurcation you mean that we will have to convert part of equity share into preference shares???

Dewang Rajpal (Manager) (21 Points)
Replied 27 September 2011

Mr. Ankur Srivastava

Could u please also help me in my query

1. Is there a standard formula or a ratio where one has to bifurcate the authorised capital

for eg IF i have authorised Capital for 10 cr.

then in this case what is the maximum ratio of equity shares and pref shares one can issue

2. On issuance of Pref shares

Is there a standard formula of how much a cos d:E ratio be

mentioned in Cos Act or SEBI

CS Ankur Srivastava (Company Secretary & Compliance Officer) (17853 Points)
Replied 28 September 2011

Dear Sakshi,

Yes you are right. Unless the part of Authorised Capital does not contain Preference Shares, you can not issue Preference Shares.

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CS Ankur Srivastava (Company Secretary & Compliance Officer) (17853 Points)
Replied 28 September 2011

Dear Dewang Rajpal ji,

There is no such standard or formula. If the Company has 10 crore or any amount of Authorised Capital it can be fully or partly equity or preference or in any combination thereof.

The standard debt equity ratio is 2:1 however, that too does not affect the issue of preference shares.