Vrindavan Organic farms Pvt Ltd

Preference shares
Preference shares allow an investor to own a stake at the issuing
company with a condition that whenever the company decides to pay
dividends, the holders of the preference shares will be the first to be
paid.

Conditions for preference shares

The Issue of Preference Shares has been authorized by Passing of Special Resolution in the General
Meeting of company.
Company requires maintaining a register under Section- 88 (Register of Member) shall contain the
particulars in respect of such preference share holder(s).
Things to be mentioned in the Special Resolution passed for the purpose of Issue of Preference Shares.
The priority with respect to payment of dividend or repayment of capital vis--vis equity shares.
The participation in the surplus fund.
The participation in surplus assets and profit, on winding-up.
The payment of dividend on cumulative or non-cumulative basis.
The conversion of preference shares into equity shares.
The voting rights.
The redemption of preference shares.

Important Condition on Preference Shares:

A. As per section 55 of the Act, a company can issue only redeemable preference shares i.e. a company is not allowed
to issue irredeemable preference shares.
B. It is mandatory for every company issuing preference shares to redeem it within a period of 20 years from the date of
issue.
C. A company may issue preference shares for a period exceeding 20 (Twenty) years for infrastructure projects. Subject
to Redemption of a Minimum 10% of such preference shares per year from the 21 (twenty first) year onward or earlier,
on proportionate basis, at the option of preference share holder. (As per rule- 10 of The Companies (Share Capital and
Debentures) Rules, 2014.
Issuance of preference shares, Explanatory Statement should mention following information: (Rule 9 of Companies
(Share Capital and Debentures) Rules, 2014)
Size of the issue and number of preference shares to be issued and nominal value of each share;
Nature of such shares i.e. cumulative or non cumulative, participating or non participating, convertible or non
convertible.
Objectives of the issue;
Manner of issue of shares;
Price at which such shares are proposed to be issued;
Basis on which the price has been arrived at;
Terms of issue, including terms and rate of dividend on each share, etc.;
Terms of redemption, including the tenure of redemption, redemption of shares at premium and if the preference shares
are convertible, the terms of conversion;

Procedure
Procedures for Issue of Preference Shares under Section 62(1)(a) of the Companies Act, 2013
Ensure the AOA authorises the issue of Preference Shares.
If AOA does not authorises for the issue of preference shares then conduct the general meeting and
pass a Special Resolution for alteration of AOA for including of an article for issue of preference
shares.
File Form MGT 14 for intimating the ROC for alteration of AOA along with the resolution
passed at the meeting and altered AOA.
Issue of Preference Shares are authorized vide Special Resolution passed at the General Meeting.
Call for a Board Meeting with 7 clear days notice to discuss the issue of Preference shares and
issue notice calling for general meeting under section 100 of the Act, authorizing such person to
issue Notice for the meeting.

 Issue Notice for the general meeting with clear 21 days notice period.
If in any case, criteria of 21 days notice period is not possible then the shorter notice consent from
at least 95% Equity Shareholders should be taken for holding the general meeting within the
shorter notice.
Explanatory statement to the notice issued u/s 102 of the Act shall as per rule 9(3) of Companies
(Share Capital and Debentures) Rules, 2014 inter-aliaprovide the complete material facts
concerned with and relevant to the issue of such shares, including
The size of the issue and number of preference shares to be issued and nominal value of each
share.
The nature of such shares i.e. cumulative or non-cumulative, participating or non-participating,
convertible or non-convertible;

 The objectives of the issue;

The manner of the issue of shares;
The price at which such shares are proposed to be issued;
The basis on which such price has been arrived at;
The terms of the issue, including terms and rates of dividend on each shares, etc.;

 The terms of redemption, including the tenure of redemption, redemption of shares at premium
and if the preference shares are convertible, the terms of conversion;
The manner and modes of redemption;
The current shareholding pattern of the company;
The expected dilution in equity share capital upon conversion of preference shares.
Hold the general meeting and pass the special resolution for issue of Preference Shares

 The resolution passed for the issue shall as per rule 9(2) of Companies (Share Capital and
Debentures) Rules, 2014 shall set out the following particulars in respect of the following matters
relating to such shares, namely
The priority with respect to payment of dividend or repayment of capital vis-a-vis equity shares;
The participation in surplus funds;
The participation in surplus assets and profits, on winding-up which may remain after the entire
capital has been repaid;
The payment of dividend on cumulative or non-cumulative basis;

Benefits Of Preference Shares

Advantages of preference shares:
They enjoy a preferential right to dividend.
Repayment of capital in case of winding-up of the company.
Disadvantages of preference shares:
The main drawback of preference shares is that they carry limited voting rights.
Generally, an equity share confers on its holder a right to vote on all resolutions that require
shareholder approval under the Act, any other law, or the articles of association of the company.
Equity shareholders, among others, enjoy the right to appoint and remove directors and auditors,
and approve the companys accounts.

 The conversion of preference shares into equity shares;

The voting rights;
The redemption of preference shares.
After passing the resolution file the resolution along with the explanatory statement issued along
with the resolution in Form MGT-14 within 30 days of passing the resolution with the filing fee as
provided in the Act and rules made there under, for registration of the same.
Convene a Board Meeting to issue Letter of Offer for the rights issue to the existing Equity share
holders which shall also include the rights of renunciation.

Interest rate
Interest rate for FD of 1 year:
Bank

Percent

SBI

5.50% ~ 7.75%

HDFC

4.00% ~ 8.00%

ICICI

4.50% ~ 8.00%

AXIS

3.50% ~ 8.00%

PUNJAB NATIONAL BANK

4.75% ~ 8.00%

BOI

4.40% ~ 7.80%

CANARA BANK

5.75% ~ 8.05%

INDIAN BANK

5.00% ~ 7.75%

BANK OF BARODA

5.00% ~ 7.80%

Sales person needed?

Currently exact number of sales persons cannot be estimated , but
approximately 20,15,20 can be expected from Mumbai , Surat, Ahmedabad
respectively.