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All About Issue of Preference Share

In this post, we also provide all about the issue of preference shares. Preference shares are the type of shares that are given preference over equity shares. The preference shareholders are given preference while the distribution of income and while the liquidation of the company.

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All About Issue of Preference Share

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  1. Conditions For Issue Conditions For Issue Conditions For Issue Conditions For Issue 1 2 3 There provision regarding the issue of shares in MoA or AoA of the company. should be a A special resolution is to be passed in the general meeting of the Board of Directors and a copy of minutes and resolution is to be sent to the Registrar Companies in Form MGT 14 within 30 days of the meeting. The maintain Preference of the company under Section 88 of Companies Act, 2013. company a has to of register Shareholders special of the

  2. Issue of Shares The preference shares can be issued in three ways: 1 2 3 Issue of Shares Issue of Shares Issue of Shares ● Preferential allotment of shares. [Section- 62(3)(c) and Section-42] ● Private Placement of shares (Section-42) ● Right issue of shares [Section- 62(1)(a)]

  3. Note: ● Allotment should be completed within 60 from the date of receiving application money. ● The issue should be under Form SH 1. ● Maintain the register of Preference Shareholders under Section 88.

  4. Redemption of Preference Shares The preference shares can only be redeemed out of surplus profits or out the funds gained for the sole purpose of redemption. The funds required for redemption are sent to Capital Redemption Reserve (CRR) then used from there for the process of redemption.

  5. Recommended Articles ❖ How to Issue Preference Shares? ❖ Transfer and Transmission of Securities Under Companies Trade Process ❖ Differences Between Equity Shares and Preference Shares ❖ Major Differences Between Shares and Debentures

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