Go Ad-Free on CAclubindia with Daily Mobile Updates. Subscribe Now!

procedure of issuance of pref shares

Naveen Malguri (Manager ) (25 Points)

12 April 2011

what is the procedures of issue of pref. Shares & debentures in a company ltd by shares

Reply
Follow
Share

2 Replies

Vinay B L (Company Secretary) (140 Points)
Replied 12 April 2011

Hello,

please tell me whether the company is a public company or private company.

Section 80 of the Companies Act, 1956 contains the provisions regarding issue of preference shares. Section 80(1) says a Company can issue the preference shares if authorised by the Articles of Association of the Company. So first check whether it is authorised by the your articles, otherwise you have to alter your AOA, for which you have to pass the special resolution in general meeting.

Further as far as the procedure for issueance of prefence shares is concerned,

Convene a Board Meeting and issue the shares and decide about the rate of dividend and redemption period. (Maximum redemption period is 20 years for preferece shares)
File Return of allotment with the Registrar of Companies (form 2) with the list of allottees. within 30 days from the date of allotment.

Other members' views are solicited.

Regards

Vinay B L

Upgrade to CAclubindia Pro. Subscribe Now!

Jayashree S Iyer (Company Secretary) (3224 Points)
Replied 12 April 2011

Procedure

1) Check the Articles of Association. If no provision, alter the Articles by holding EGM and passing a special resolution. File form 23 within 30 days.

2) Check if the Authorised Share Capital of the company is sufficient. Otherwise increase the ASC by holding EGM and passing Ordinary Resolution (if only MOA is to be amended) or Special Resolution (if AOA also to be amended). File form 5 and pay necessary fee for increase in ASC.

3) Hold the Board Meeting and allot shares. File form 2 within 30 days of allotment.

4) Issue Share Certificatesand make necessary entries in the Register of Members.