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A company can issue two types of shares - Preference Shares and Equity Shares. Preference Shares have a preferential right for the payment of dividend during the lifetime. Equity Shares are those shares which are payable at the winding up of the company only.
A company can issue two types of shares - Preference Shares and Equity Shares. Preference Shares have a preferential right for the payment of dividend during the lifetime. Equity Shares are those shares which are payable at the winding up of the company only.
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A company can issue two types of shares - Preference Shares and Equity Shares. Preference Shares have a preferential right for the payment of dividend during the lifetime. Equity Shares are those shares which are payable at the winding up of the company only.
Copyright:
Attribution Non-Commercial (BY-NC)
Formati disponibili
Scarica in formato PPT, PDF, TXT o leggi online su Scribd
company by the issue of shares. The share capital of
company is always a definite amount divided in to different shares. Under the Companies Act, 1956, a company can issue two types of shares. (a) Preference shares (b) Equity Shares Preference shares are those which have a preferential right for the payment of dividend during the lifetime, a preferential right for the return of capital when the company is wound up. A company may issue the following types of Preference Shares. 1. Cumulative Preference Shares The dividend payable on these shares goes on accumulating till it is fully paid off. The accumulated dividend is paid to the Cumulative Preference shareholders before any dividend is paid to other types of shareholders. 2. Non-Cumulative Preference Shares These are the shares on which the dividend does not go on accumulating. If there are no profits or there are inadequate profits in any year, these shares get no dividend or a partial dividend. 3. Participating Preference Shares When Preference shares participate like equity shares in the profits of a company in addition to their stated profits they are known as Participating Preference Shares. 4. Non-Participating Preference Shares These are entitled to only a fixed rate of dividend and do not share in the surplus profits which go to the equity share holders.
5. Convertible Preference Shares
The holders of the shares have a right to convert them in to equity shares with in a certain period. 6. Non-Convertible Preference Shares The preference shares without a right of conversion into equity shares are called Non- Convertible equity shares. 7. Redeemable Preference Shares(Sec.80) Ordinarily the capital that is raised by the issue of shares can be returned the company only on its winding up. But a company limited by shares, if authorized by its articles, issue Preference shares which are to be redeemed. Such shares are called redeemable preference shares. 8. Irredeemable Preference shares Irredeemable preference shares are those shares which are payable at the winding up of the company only. Equity shares, with reference to any company limited by shares , are those which are not Preference shares[Sec.85(2)]. The holders of these shares are entitled to dividend after the fixed dividend on preference shares has been paid. The dividend to equity shareholders will vary with the amount of profits available for distribution.