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CSEET · Business Laws and Management · Elements of Company Law

As per the Companies Act, 2013, preference share capital means that part of the issued share capital which carries or would carry a preferential right with respect to:

Preference share capital carries a preferential right to dividend payable as a fixed amount or at a fixed rate, and to repayment of the paid-up capital on winding up or repayment of capital. Voting rights or bonus priority are not defining features.

  1. AVoting on all resolutions and appointment of directors
  2. BPayment of dividend at a fixed amount or fixed rate, and repayment of paid-up capital on winding up or repayment of capitalCorrect
  3. CAllotment of bonus shares before other shareholders
  4. DTransfer of shares without any restriction in the articles

Explanation

The Explanation to Section 43 defines preference capital by two preferential rights: dividend as a fixed amount or at a fixed rate, and repayment of paid-up capital on winding up or repayment of capital. Voting, bonus shares and transfer are not part of the definition.

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