Company Law

Kinds of share capital [S. 43] and their voting rights [S. 47(1)]

   

Equity Share Capital

Preference Share Capital

1.

Share Capital [S. 43]
  • With voting rights
  • With differential rights as to dividend, voting or otherwise in accordance with the prescribed rules

means that part of the issued share capital of the Co which carried or would carry a preferential right with respect to –

  • Payment of dividend; and
  • Repayment, in case of winding up or repayment of capital

2.

Voting rights

[S. 47(1)]
  • No voting rights in respect of payment of calls in advance
  • On show of hands : 1 member = 1 vote; and
  • on a poll : in proportion to his share in the paid-up equity share capital of the Co
  • Every member holding preference share capital shall have a right to vote only on
    • the resolutions placed before the Co which directly affect the rights attached to his preference shares and,
    • any resolution for winding up of the Co or for repayment or reduction of its equity or preference share capital

    and his voting rights on a poll shall be in proportion to his share in the paid-up preference share capital of the Co

  • Further voting rights of equity SH : voting rights of preference SH = paid up equity share capital : paid up preference share capital

    Example:

    Paid-up Equity share capital: ₹ 700

    Paid-up Preference share capital: ₹ 300

    Voting right of a Preference SH holding ₹ 100, on a poll to repay ₹ 200 to equity SH

    = 100/300 * (300/(700+300))

  • If dividend in respect of any class of preference shares has not been paid for 
    2 years or more    , such preference SH shall have a right to vote on all the resolutions placed before the Co.